Compute the equilibrium price and quantity for a given level of income
Suppose the demand curve for a product is given by Q = 300-2P+4I where ‘I' is average income measured in thousands of dollars. The supply curve is Q = 3P - 50.
a) If I=25, find the equilibrium price and quantity for this product.
b) If I increased to 50, find the equilibrium price and quantity for this product.
c) Plot the curves and indicate the results found in a) and b) above
d) Is this good a 'normal or 'inferior' good? describe