Example of market failure or missing market: Let assume that the straight-line supply equation will be as follows:? = 20 +?, where p and q stand for price and quantity respectively. Here, 20 is a fixed cost. This supply equation also tells us for each quantity of a given good what will be corresponding seller's price. Similarly, the straight-line demand equation is as follows:? = 10 ??, where p and q stand for price and quantity respectively. Here, 10 is the maximum price where the quantity demanded is zero. This demand equation also tells us for each quantity of given good what will be the maximum willingness to pay.

By plotting these two equations, we obtain the following figure:

Observe that, there is no intersection between demand and supply equations. Therefore, there is no market equilibrium.

(a) Explain with the help of economic intuition why there is no market equilibrium price and quantity (for this you do not need to solve any equation). (b) Now go toChatGPT(https://chat.openai.com/chat), and solve the above equations:p=10-q and p=20+q with the help of ChaTGPT. (i) Write the ChatGPT's answer and(ii) explain whether it is correct or not in terms of existing economic theories?

(Hints: For questions 7(b), you can amend the question and run couple of iterations that is, paste your amended questions in the box of ChatGPT. In that case, you also need to write your

amended questions and corresponding ChatGPT's answers in Appendix to make/support your

argument.

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