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# A product's Market Demand Curve is: Qd = 25 - P, and its Market Supply Curve is: Qs = 10 + 2P. Plot the demand and supply curves on the same graph,...

5. A product's Market Demand Curve is: Qd = 25 - P, and its Market Supply Curve is: Qs = 10 + 2P. Plot the demand and supply curves on the same graph, then use the graph to respond to the following : When P = \$20, what is the difference in output, if any, between Qd and Qs?

6. Consider the demand and supply curves in Q.5.
Assume market demand increases and that the new demand curve is now Qd = 50 – P. Further assume the government provides to each firm, a subsidy of \$40 per unit of output produced. Thus the supply curve now becomes Qs = 10 + 2(P+40).
Develop a graph for the new demand and supply curves. Then use the graph to find the new equilibrium price and quantity.

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