Consider the free market model involving the quantities of a product bought and sold, Q, at price P, as follows: Q = a1 + a2P, where a1 < 0, a2 > 0, and Q = b1 + b2P, where b1 > 0, b2 < 0. (i) Identify which of the above equations is the market demand, and which is the market supply, Curves, and explain the reasons for your choices. (ii) For the specific model: Q = -15P+2200 and Q = -800+10P, solve for the market equilibrium price (P*), and quantities (Q*) outcomes. (iii) Sketch a graphical representation of this market model. (Must label ALL intercepts and slopes clearly on your graphs).

Consider the free market model involving the quantities of a product bought and sold, Q, at price P, as follows: Q = a1 + a2P, where a1 < 0, a2 > 0, and Q = b1 + b2P, where b1 > 0, b2 < 0. (i) Identify which of the above equations is the market demand, and which is the market supply, Curves, and explain the reasons for your choices. (ii) For the specific model: Q = -15P+2200 and Q = -800+10P, solve for the market equilibrium price (P), and quantities (Q) outcomes. (iii) Sketch a graphical representation of this market model. (Must label ALL intercepts and slopes clearly on your graphs).

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter1: The Art And Science Of Economic Analysis

Section: Chapter Questions

Problem 4.7P

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