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Unformatted text preview: q = 9 & p (Demand) q = 1 + p (Supply) (in this case you may put q on the y-axis). The equilibirum price p & is the price where supply equals demand. Find the equilibrium price and the quantity traded. (a) Suppose supply increases to q = 3 + p: Find the equilibrium outcome assuming the demand curve described above. Draw a diagram which depicts your answer. (b) Suppose instead demand falls to q = 7 & p: Find the equilibrium outcome assuming the supply curve described above. Draw a diagram which depicts your answer. (c) Flip your diagrams in (a) and (b) so that p is now on the y-axis. Explain how market price adjusts to shifts in demand and supply. 1...
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This note was uploaded on 12/31/2011 for the course ECON MR 102 taught by Professor Huyduong during the Winter '11 term at RMIT Vietnam.
- Winter '11