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In the perfectly competitive market for pretzels there are 2 sources of demand-Yufeng and Hana. Each one has an inverse demand curve of P =
In the perfectly competitive market for pretzels there are 2 sources of demand-Yufeng and Hana. Each one has an inverse demand curve of P = 20 - Q. The market supply curve is given by Q = P - 2.
- What is the equation for the market demand curve?
- Draw the market demand and supply curves. On this graph identify the slopes of the two curves, the equilibrium price and quantity, the values for demand when P=0 and when Q=0, and the value for the supply curve when Q=0.
- Assume a perfectly competitive market. What is the market equilibrium price and quantity? Identify this outcome on the graph.
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