|Question||Consider the following sequence of changes in the demand and supply for cab service in some city. The price P is a price per mile, while quantity is the total length of cab rides over a month (in thousands of miles).
January: Initial demand and supply are given by the equations Qs = 30P – 30 (when P ? 1), and Qd = 120 – 20P
February: Due to higher prices of gasoline, the supply of cab service changed to Qs = 30P – 60 (when P ? 2).
March: Over the spring break, the demand for taxi service was higher and therefore demand curve was given by the equation Qd = 140 – 20P.
a) For each month find equilibrium price and quantity.
b) Illustrate your answer with a graph. Illustrate the equilibrium prices and quantities on the graph.