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1. Suppose market demand and market supply are represented by following equation-
Qd= 350-100P
Qs=-50+100p
(a). Calculate equilibrium price and equilibrium quantity.
(b). Determine whether surplus or shortage occurs at the price 3.
(c). Can equilibrium be established when price equal 3.
2. Discuss a change in demand resulted in a change in the market price. Provide an example of how a change in supply resulted in a change in the market price. How does the price mechanism work to keep markets in equilibrium?
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