Suppose the demand for good X is given by Qd = 500 – 10Px – 5Py, Where Qd is the quantity demanded, Px is the price of good X1 an Py is the price of good Y, Suppose further that the supply for good X is given by Q5 = 10Px, where Q5 is the quantity supplied of good X.
1. What are the equilibrium price and quantity, Px* and Qx* respectively, when Py=5
2. What are the equilibrium price and quantity, Px* and Qx* respectively, when Py=10
3. How would you characterize the relationship between good X and good Y, are they substitutes or complements?
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