Consider the market for butter. The demand curve is given by Qd 300-2x P+4 xI, where I is the average income. The supply curve is Qs 3P- 25 x PM-25, here PM is the price of milk. If the average income in Cambridge is I = 25 and the price of milk is PM = 1, what is the market clearing price and
Consider the market for butter. The demand curve is given by Qd 300-2x P+4 xI, where I is the average income. The supply curve is Qs 3P- 25 x PM-25, here PM is the price of milk. If the average income in Cambridge is I = 25 and the price of milk is PM = 1, what is the market clearing price and
Chapter4: Markets In Action
Section: Chapter Questions
Problem 6SQ
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Transcribed Image Text:2 Consider the market for butter. The demand curve is given by
= 300 -2 x P+4 xI,
where I is the average income. The supply curve is
Qs = 3P - 25 x PM-25,
where PM is the price of milk.
If the average income in Cambridge is I = 25 and the
price of milk is PM = 1, what is the market clearing price and
quantity in Cambridge?
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