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Suppose demand is given by P = 25 - .10Q and supply is given by P = 15 (supply is perfectly elastic), where P represents
Suppose demand is given by P = 25 - .10Q and supply is given by P = 15 (supply is perfectly elastic), where P represents dollar price and Q represents the number of units sold each year.
- Draw graphically and show the competitive equilibrium
- Calculate the annual value of aggregate consumer and producer surplus.
- Calculate the both the elasticity of supply and the elasticity of demand when P=15.
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