Q6 The demand and supply functions for two interdependent commodities are given by: Qp, = 120 – 2P, + P;; Qs, = -7 + 7P, Qp, = 168 + 3P, – 7P;; Qs, = -3 + 20P, %3D (a) Explain whether these goods are...

Extracted text: Q6 The demand and supply functions for two interdependent commodities are given by: Qp, = 120 – 2P, + P;; Qs, = -7 + 7P, Qp, = 168 + 3P, – 7P;; Qs, = -3 + 20P, %3D (a) Explain whether these goods are complementary or substitutable. (b) Determine the equilibrium price and quantity. (c) The government decides to provide a subsidy of $4 on each unit of good 1 only. What effect does this subsidy have on the equilibrium prices of each good?