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You are given the following supply and demand functions in a hypothetical lumber market:
Q^D=10,000-25P
Q^S=10P
A.) Draw a market equillibrium graph and compute the equillibrium price and quantity in the lumber market.
B.) Compute the producer and consumer surpluses in the lumber market
C.) Construction boom in China increases export demand for lumber. the new demand function is : Q^D = 15,000-25P. Compute the resulting change in the producer surplus.
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What happens to each of these values if the central bank changes the reserve requirement ratio to 3%.
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