Managerial Economics- The equilibrium price and quantity

The demand and supply functions for sweatshirts (the basic grey kind) are as follows:

Demand Supply

Quantity Quantity

Demanded Supplied

Price (per period) Price (per period)

$10 15,000 $10 22,000
9 15,500 9 19,000
8 16,000 8 16,000
7 16,500 7 13,000
6 17,000 6 10,000
5 17,500 5 7,000
4 18,000 4 4,000
3 18,500 3 1,000
2 19,000 2 0

a. Graph the demand and supply functions for sweatshirts and find the equilibrium price and quantity.

  1. What effect will an increase in the price of gym shoes (a complement) have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.
  2. What effect will a wage increase for workers in the sweatshirt industry have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.

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