Equilibrium is the condition in the market system when the quantity demanded is equal to the quantity supplied. In the market for mobile data equilibrium will occur when the quantity demanded is equal to the quantity supplied. Depicted in the diagram below, equilibrium (E) is where the demand curve intersects the supply curve. Depicted in the diagram quantity supplied can be represented by the equation QS= 30+0.4P and the quantity demanded can be represented by the equation QD = 120-1.1P. For scenario 2, answer the following questions:

5.1. Calculate the equilibrium quantity and price if the quantity supplied can be represented by the equation QS = 30 + 0.4P and the quantity demanded can be represented by the equation QD = 120 - 1.1P. [Tip: Solve the value of P first and then substitute this P-value in the calculation of the Qvalue.]

5.2. Illustrate and explain how an increase in household income will affect the equilibrium price and quantity in the market for mobile data.