Suppose the demand for fidget spinners (remember those?) is represented by the equation: D = 60-p,...

 

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Suppose the demand for fidget spinners (remember those?) is represented by the equation: D = 60-p, where p is price, and that supply is represented by the equation S-15+3p-w, where w is the wage rate for eyelet factory workers. a) Assuming the market wage rate is $15/hour, what is the equilibrium price? What is the equilibrium quantity? b) What are the equilibrium price and quantity if the wage increases to $23/hr? c) Use the changes in price and quantity demanded above to calculate the price elasticity of demand. Interpret your result (i.e. what does the elasticity you calculate mean?). Suppose the demand for fidget spinners (remember those?) is represented by the equation: D = 60-p, where p is price, and that supply is represented by the equation S-15+3p-w, where w is the wage rate for eyelet factory workers. a) Assuming the market wage rate is $15/hour, what is the equilibrium price? What is the equilibrium quantity? b) What are the equilibrium price and quantity if the wage increases to $23/hr? c) Use the changes in price and quantity demanded above to calculate the price elasticity of demand. Interpret your result (i.e. what does the elasticity you calculate mean?).

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Lets solve each part of the question step by step a Assuming the market wage rate is 15hour The equi... View the full answer