Question 3: (4 marks) (A) Consider the market for Gym clothes, here's the supply function QS = 11 +3Pg + OPo and the dem

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Question 3 4 Marks A Consider The Market For Gym Clothes Here S The Supply Function Qs 11 3pg Opo And The Dem 1 (92.71 KiB) Viewed 17 times

Question 3: (4 marks) (A) Consider the market for Gym clothes, here's the supply function QS = 11 +3Pg + OPo and the demand function: QD = -4Pg + 4Po.; Where Pg and Po are the prices of Gym Clothes and Office clothes, respectively. If the price of office clothes is $6, what is the market price of Gym clothes? (B) Calculate the Willingness to Pay and the Economic Cost (C). Now, suppose the regulated price of Gym clothes is fixed at $6, ceteris paribus, will there be a surplus or shortage? (D) Calculate the amount of surplus/shortage. (E) Suppose that the market for Gym clothes is not regulated anymore. If the price of Office clothes is increased from $6 to $10, what will be the new market price of Gym clothes?