1. An economist has concluded that, near the point of equilibrium, the demand and supply curve for one-year discount bonds can be estimated using the following equations:

Bond Demand: Price=-25Quantity+940

Bond Supply: Price=Quantity+500

1. What is the expected equilibrium price and quantity of bonds in this market? (Hint: The equilibrium price is the one that makes the quantity demanded equal to the quantity supplied.)
2. Given your answer in part (a), what is the expected interest rate in this market if the face value is $1,000? (Hint: For one-year discount bond, the interest rate is Face Value-Price of BondPrice of Bond.)