The demand curve for a product has equation p = 20e0.002q and the supply curve has

Chapter 6, Problem 50

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The demand curve for a product has equation p = 20e0.002q and the supply curve has equation p = 0.02q + 1 for 0 q 1000, where q is quantity and p is price in $/unit. (a) Which is higher, the price at which 300 units are supplied or the price at which 300 units are demanded? Find both prices. (b) Sketch the supply and demand curves. Find the equilibrium price and quantity. (c) Using the equilibrium price and quantity, calculate and interpret the consumer and producer surplus.

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