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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.

  1. Draw graphically and show the competitive equilibrium
  2. Calculate the annual value of aggregate consumer and producer surplus.
  3. Calculate the both the elasticity of supply and the elasticity of demand when P=15.

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