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Homework answers / question archive / The demand for 1998 Honda Civics in BC is given by P = 5,400 - 200Q - 0
The demand for 1998 Honda Civics in BC is given by P = 5,400 - 200Q - 0.01I, where P is the car price in $, Q is the quantity demanded (number of cars per year), and I is the average income of the buyers ($ per year). The supply is given by P = 1,000 + 200Q, where P is the car price in $, Q is the quantity supplied (number of cars per year).
a. If the average income is I = $40,000 per year, what are the equilibrium price and quantity?
b. If the average income is I = $80,000 per year, what are the equilibrium price and quantity?
c. Is the 1998 Honda Civic a normal or inferior good? Explain.
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