(Solution) - Consider the market for wool described by the supply and -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Consider the market for wool described by the supply and demand equations in Problem 1.12. Suppose income rises from I1 = 20 to I2 = 24.
a) Using comparative statics analysis, find the impact of the change in income on the equilibrium price of wool.
b) Using comparative statics analysis, find the impact of the change in income on the equilibrium quantity of wool.