The demand and supply functions for sweatshirts (the basic grey kind) are as follows:

Demand Supply
Quantity Quantity
Demanded Supplied
Price (per period) Price (per period)
$10 15,000 $10 22,000
9 15,500 9 19,000
8 16,000 8 16,000
7 16,500 7 13,000
6 17,000 6 10,000
5 17,500 5 7,000
4 18,000 4 4,000
3 18,500 3 1,000
2 19,000 2 0

a. Graph the demand and supply functions for sweatshirts and find the equilibrium price and quantity.
b. What effect will an increase in the price of gym shoes (a complement) have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.
c. What effect will a wage increase for workers in the sweatshirt industry have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.

a. Equilibrium price and quantity are $8 and 16,000 units.
b. An increase in the price of gym shoes will cause the demand for sweatshirts to decrease, i.e., the demand curve for sweatshirts will shift left. The decrease in demand will result in a decrease in the equilibrium price and quantity of sweatshirts.
c. An increase in the wages of workers in the sweatshirt industry will lead to a decrease in the supply of sweatshirts, i.e., the supply curve will shift left. This will result in an increase in equilibrium price and a decrease in equilibrium quantity.