3. Consider the following demand schedule for bottles of water:

PRICE (P) Quantity Demanded by Consumers(bottles/month)

$0.50 1,100

1.00 1,050

1.50 1,000

2.00 950

2.50 900

3.00 850

3.50 800

4.00 750

4.50 700

5.00 650

The equations representing demand, inverse demand, supply and inverse supply are as follows:

Demand: Qd = - 100P + 1,150

Inverse Demand: P = - 0.01 Qd + 11.5

Supply: Qs = 400 P - 100

Inverse Supply: P = 0.0025 Qs + .25

Using this information, determine the equilibrium price and quantity for bottled water in this market. Explain what will happen in the market if price equals $4.00. What will happen if price equals $2.00?

PRICE (P) Quantity Demanded by Consumers(bottles/month)

$0.50 1,100

1.00 1,050

1.50 1,000

2.00 950

2.50 900

3.00 850

3.50 800

4.00 750

4.50 700

5.00 650

The equations representing demand, inverse demand, supply and inverse supply are as follows:

Demand: Qd = - 100P + 1,150

Inverse Demand: P = - 0.01 Qd + 11.5

Supply: Qs = 400 P - 100

Inverse Supply: P = 0.0025 Qs + .25

Using this information, determine the equilibrium price and quantity for bottled water in this market. Explain what will happen in the market if price equals $4.00. What will happen if price equals $2.00?

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