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) A market's demand and supply functions are as follows: Qd = 300 - P/8, and Qs = P/10 - 60.For parts 2 - 5,
) A market's demand and supply functions are as follows: Qd = 300 - P/8, and Qs = P/10 - 60.For parts 2 - 5, use ONE graph.
- (4 points) Determine the equilibrium price and quantity.
- (9 points) Graph the inverse demand and supply curves with Q on the horizontal axis and P on the vertical axis. Clearly label all axes, curves, intercepts, and the equilibrium price and quantity values.
- Assume the government sets a rule that the selling price cannot go above $800. What kind of a price restriction is this?Answer with two words.Draw this price restriction on your graph in part (2) and label it.
- (Will this government restriction cause a shortage or surplus? Answer with one word.Calculate this value and show it on your graph in part (2).
- What is the deadweight loss with the price restriction in place? Calculate this value and show this area on your graph in part (2).
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