The following relations describe monthly demand and supply relations for dry cleaning services in the metropolitan area:
Question:
The following relations describe monthly demand and supply relations for dry cleaning services in the metropolitan area:
QD = 500,000 - 50,000P(Demand)
QS = -100,000 + 100,000P (Supply)
Where Q is quantity measured by the number of items dry cleaned per month and P is average price in dollars.
A. At what average price level would demand equal zero?
B. At what average price level would supply equal zero?
C. Calculate the equilibrium price/output combination.
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Step by Step Answer:
A From the demand relation note that demand equals zero when Q ...View the full answer
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