432HW03[1] - Westerhold Name:_ Econ432

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Westerhold Name:_____________________________ Econ 432 HW #3: Efficient Provision of Private and Public  Goods due Monday, June 21 st Undergraduates should answer questions 1- 3 only. Graduate students should  complete the entire assignment. 1. Assume we have the following information for two consumers, Bill and Jessica, for office  supplies. Show the private market results in an efficient allocation of resources for private  goods. Bill:  P=100-5Qd Jessica:   P=75-2.5Qd A. Determine each person’s demand equation (Qd=) and graph each person’s demand  curve separately showing the values for the x and y intercepts for Bill and Jessica.  Also create the market demand equation and graph the market demand curve showing  the x and y intercept values.
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B. Assume the market supply curve is given as Qs= -20 + 2P.  Show this on your market  graph above and indicate the value of the minimum selling price. C. Determine the equilibrium price (Pe) and quantity (Qe) and show this on your graph in  part A. D. At the market price, determine the amount of office supplies that Bill will purchase 
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432HW03[1] - Westerhold Name:_ Econ432

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