New equilibrium price and the new equilibrium quantity


The supply and demand for the paper firm is given by:

QS=100P-5000

and

QD=0.5 i + 0.2A-100P+5000

where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.

1. If A=$10,000 and I =$25,000, what is the demand curve?

2. Plot the demand curve found in part A with the supply curve, then use the graph to find the equilibrium price and quantity.

3. If consumer incomes increase to $30,000, what will be the new equilibrium price and the new equilibrium quantity?

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Microeconomics: New equilibrium price and the new equilibrium quantity
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