16. Annual demand and supply for an electronic company is given by: QD =5,000+0.5I+0.2A 100P and QS = ?5000 + 100P where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.

 

(a) If A = $10,000 and I = $25,000, what is the demand curve?

(b) Given the demand curve in part (a), what is equilibrium price and quantity?

(c) If consumer income increases to $30,000, what will be the impact on equilibrium price and quantity?

Answer rating: 100% (QA)

a To find the demand curve we substitute the given values of A and I into the demand equation and so... View the full answer