1 pts Question 13 Suppose that the inverse demand curve for

1 pts Question 13 Suppose that the inverse demand curve for a product is given by: P- 100 - Qd+ 2M, where M is the average income in 1000 USD. The inverse supply is P = 0.5Qs-20. If M-15 the equilibrium price is equal toand the equilibrium quantity is equal to O 40, 60 O 100, 30 O 30, 100 O 60,40

Solution

Demand is given by P = 100 - Qd +2*15 or P = 130 - Qd. Supply is P = 0.5Qs - 20. Equilibrium occurs when demand and supply function meet

130 - Qd = 0.5Qs - 20

150 = 1.5Q

Q* = 100 and price is P = 30.

Hence the correct choice is third one, equilibrium price is 30 and quantity is 100.