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29 July, 06:02

Suppose that the pizza demand function is d (p, y) = 60-10p+2y and the pizza supply function is s (p, pm) = 20p-20pm where p is the price of pizza, y is aggregate income, and pm is the price of materials. if y = 70 and pm = 5, then the equilibrium quantity is:

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  1. 29 July, 09:37
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    The equilibrium quantity is the value of p when the demand d and supply s is equal. Therefore we equate the two equations:

    60 - 10p + 2y = 20p - 20pm

    We are given that:

    y = 70

    pm = 5

    p = ?

    60 - 10p + 2 (70) = 20p - 20 (5)

    200 - 30p = - 100

    - 30p = - 300

    p = 10
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