Consider the Following Demand and Supply Curves: Q^d = 100

question 29

Multiple Choice

Consider the following demand and supply curves: Q^d = 100 - 2P, and Q^s = ½ P, calculate the equilibrium P and Q for this initial situation and assuming the supply curve changes to Q^s = ½ P + 10. Which of the following is correct?

• A) the initial equilibrium is P = 40, Q = 20 and the supply curve shifts left.
• B) the initial equilibrium is P = 40, Q = 20 and the new equilibrium is P = 36, Q = 28.
• C) the initial equilibrium is P = 40, Q = 20 and the new equilibrium remains the same.
• D) the initial equilibrium is P = 40, Q = 20 and the new equilibrium is P = 38, Q = 28.

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