1.The following represents demand for widgets (a fictional product):

Q_D = 10,054 - 26P + 0.01M + 1.5P_R

where P is the price of widgets, M is income, and P_R is the price of a related (fictional) good, the wodget. Supply of widgets is determined by

Q_S = 60P - 1,000

a.Determine whether widgets are a normal or inferior good, and whether widgets and wodgets are substitutes or complements.

b.Assume that M = $56,000 and P_R = $112. Solve algebraically to determine the equilibrium price and quantity of widgets.

c.Generate a supply/demand graph in Excel. Be sure that P is the vertical axis and Q the horizontal. Does the graphical equilibrium correspond to your algebraic equilibrium? Please give me the graph. Also write yes or no for the graphical equilibrium correspond to your algebraic equilibrium

d.Now assume two events occur: income changes such that M = $58,000 and supply conditions change such that Q_S = 55P - 700. Solve algebraically for the new equilibrium price and quantity of widgets after these two changes.