Consider the a mid-sized southwestern college town where the demand for liquor is described by the equation:Q_D= 1500- 75P, whereQ_Dis the quantitybottles of liquor per month andPis the price (in dollars) for one bottle of liquor.The supply of liquor is described by the equation:Q_s= 50P- 225whereQ_sis the quantity of bottles of liquor per month. Last month, the local government repealed part of its restricting laws on the public consumption and sale of liquor.As a result of this change, the market for liquor is adjusting and the current market price is $16.

1.At the current market price, what is the quantity of liquor traded?(4points)

2.At the current market price, is the market in equilibrium?( 2 points)

Complete the sentence by entering one of the following phrases in the blank space provided:is|is not

At the current market price, the market ______in equilibrium.

3.Given the current market price, do you anticipate that there will be further adjustments in the market for liquor?(6 points)

Complete the sentence below by entering one of the following phrases in the blank space provided:

in the first blank space:can not be certain about any additional|would expect additional|would not expect any additional

in the second blank space:will not change|will increase towards the equilibrium price|will decrease towards the equilibriumprice|will have an ambiguous change

in the third blank space:will not change|will increase towards the equilibrium quantity|will decrease towards the equilibrium quantity|will have an ambiguous change

Given the current market price, one_________changes in the market for liquor.Specifically, the market price________and the quantity traded________.

4.What are the equilibrium price and the equilibrium quantity?(6 points)

The equilibrium price is $__________and the equilibrium quantity is _____________bottles of liquor per month.

Consider that about three weeks after the repeal went into effect, more sellers entered the liquor marketandat the same time, health officials reported a sudden surge in the number of new alcohol poisoning among college students.

5.Given these observations, what market outcome would one observe in the market for liquor?(4 points)

Complete the sentence by entering one of the following phrases in each of the blank space provided.A phrase can be used more than once:decrease|increase|have an ambiguous change|not change

Given these observations, one can say that the market demand did____________and the market supply did ___________.As a result, one should observe the equilibrium price to_______________and the equilibrium quantity to_____________.

Given these events, consider that with health officials information, the demand for liquor is described by the following equation:Q_D= 1650 - 75P.Furthermore, the supply for liquor is described by one of the following equations:

Equation A:Q_s= 50P- 325orEquation B:Q_s= 50P - 125.

6.Which of the two supply equations is more likely to be new supply equation? (2 points)

Complete the sentence by entering one of the following phrases in the blank space provided:A|B

The new supply equation is more likely Equation___________.

7.Using the new equations, what are the new equilibrium price and the new equilibrium quantity?(6 points)

The equilibrium price is $___________and the equilibrium quantity is_____________bottles of liquor per month.