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# h1 ans - to the right New equilibrium P = 4 Q = 700(c Now...

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1 The Colorado College Department of Economics and Business Block 7 Econ 207 HW 1 answers. 1. (a) (b) Yes, the points lie on two straight lines. (c) At P=\$1, excess demand is D-S = 700 – 100 = 600. (d) At P=\$5, excess supply is S-D = 900 – 300 = 600. (e) Equilibrium occurs at D=S. P =\$3; Q=500. 2. (a) At P = 2, Demand = 600 and Supply = 300. At P = 4, Demand = 400 and Supply = 700 At these two prices the quantities demanded and supplied are not the same. As such they are not the equilibrium. (b) When demand increases by 300 million at each level of price, the demand curve shifts

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Unformatted text preview: to the right. New equilibrium P = 4, Q = 700. (c) Now the supply curve shifts to the left. \$3 500 D S Q P \$4 700 \$3 500 D S Q P 2 When supply reduces, the new equilibrium: P = 4, Q = 400 3. (a) Q D = –2P + 20. Q S = 2P – 4. Set Q D = Q S : –2P + 20 = 2P – 4 24 = 4P P = 6; Q = 8. (b) Now Q D’ = –2P + 24. Set Q D = Q S : –2P + 24 = 2P – 4 28 = 4P P = 7; Q D = Q S = 10. (c) Q / d = -2P + 24 = Q / s = 2P – 8. Solving P = 8; Q = 8. \$6 8 D S Q P \$3 500 D S Q P \$4 400 3 Q P D S Q P D S (b) (c) \$7 10 \$8 8...
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h1 ans - to the right New equilibrium P = 4 Q = 700(c Now...

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