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Unformatted text preview: (c) Now suppose that a freeze in Florida reduces orange juice supply by 300 million gallons at each price. Using your initial demand graphically show how it would affect the supply curve. What is the new equilibrium price and quantity? (2+4+4 = 10 points) 3. Consider the demand and supply function of the following form: Q d = -2P + 20 Q s = 2P 4. where Q s is the quantity supplied, Q d is the quantity demanded and P is the price. (a) Solve for the equilibrium price and quantity. Also graph the supply-demand equilibrium. (b) Now suppose at each price that individuals demand four more units of output and the demand curve shifts to Q / d = -2P + 24 Graph this situation and also calculate the new equilibrium price-quantity using the initial supply function. (c) Now, suppose the supply curve shifts to Q / s = 2P 8. 2 What is the new equilibrium price and quantity, using the new demand function? Graph the situation also. (2+4+4=10 points)...
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- Spring '08
- Supply And Demand