Consider the following supply and demand system. (Assume a, b, c, and d are constants)
Q = a - bP
Q = -c + dP
Find the equilibrium price and quantity.
Determine (mathematically) what happens to the equilibrium price and quantity when b increases. (Do they go up or down, and by how much?)
Draw a graph representing an increase in b.
Determine (mathematically) what happens to the equilibrium price and quantity when c increases. (Do they go up or down, and by how much?)
Draw a graph representing an increase in c.