Q1 Imagine that the market demand and supply functions of widget can be specified as follows:

Qd = 220-5P Qs=-20+3P;

(a) What is the equilibrium price and quantity? (5 Points) (b) suppose the price should rise by $5, how many widgets will consumers demand? (5 Points) (c) Show and explain what would happen if the disposable income of the widget consumers increases (5 points) (d) Suppose the market demand function can be alternatively specified as:

Qd =3,500-10P + 0.1M- 12PR;

where P is for the price of widgets, M is for disposable income with an average value of $50K, and PR is for the price of a related good that has recently been increased by $100, what will be the estimate price of widgets in the market (5 Points) ?

(e) Is the related good a substitute for widgets or a complement of widgets? Why (5 Points) ?