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3. When the price of a certain product is $40, 25 items can be sold. When the price of the same product costs $20, 185 items can be sold. On the other hand, when the price of this product is $40, 200 items will be produced. But when the price of this product is $20, only 100 items will be produced. Use this information to find supply and demand functions (assume for simplicity that the functions are linear), and compute the consumer and producer surplus at the equilibrium price.

3. When the price of a certain product is $40, 25 items can be sold. When the price of the same product costs $20, 185 items can be sold. On the other hand, when the price of this product is $40, 200 items will be produced. But when the price of this product is $20, only 100 items will be produced. Use this information to find supply and demand functions (assume for simplicity that the functions are linear), and compute the consumer and producer surplus at the equilibrium price.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter6: Consumer Choices
Section: Chapter Questions
Problem 17P: If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded...
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3. When the price of a certain product is $40, 25 items can be sold. When the price of the same product costs $20, 185 items can be sold. On the other hand, when the price of this product is $40, 200 items will be produced. But when the price of this product is $20, only 100 items will be produced. Use this information to find supply and demand functions (assume for simplicity that the functions are linear), and compute the consumer and producer surplus at the equilibrium price.
Transcribed Image Text:3. When the price of a certain product is $40, 25 items can be sold. When the price of the same product costs $20, 185 items can be sold. On the other hand, when the price of this product is $40, 200 items will be produced. But when the price of this product is $20, only 100 items will be produced. Use this information to find supply and demand functions (assume for simplicity that the functions are linear), and compute the consumer and producer surplus at the equilibrium price.
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