In economics, the supply of a product is the quantity of

Chapter , Problem 1.5.30

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In economics, the supply of a product is the quantity of that product suppliers are willing to provide at a given price. In theory, the quantity supplied of a product increases if the price of that product increases. Suppose that there is a linear relationship between the quantity supplied, , of the product described in and its price, . The quantity supplied weekly is 100 when the price is $2 and the quantity supplied rises by 50 units when the price rises by $0.50. (a) Find a formula for in terms of . (b) Interpret the slope of your formula in economic terms. (c) Is there a price below which suppliers will not provide this product? (d) The market clearing price is the price at which supply equals demand. According to theory, the freemarket price of a product is its market clearing price. Using the demand function from 29, find the market clearing price for this product.

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