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Demand for flower bouquets in a suburban town is described by: QD = 50 – 5P...

Demand for flower bouquets in a suburban town is described by: QD = 50 – 5P + 2Y, where Q is quantity, P is price per unit, and Y is an index of consumer income. Similarly, supply is described by: QS = –5 + 10P. (a) If Y = 100, what is equilibrium price and output? (b) If Y rises to 122.5, what is the new equilibrium price and output? Draw a graph showing the old and new equilibrium.

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