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Suppose that the demand for video rentals per week is given by Qdvideos = 18 - 4Pvideos, and the supply of videos is Qsvideos = 6 + 2Pvideos.
a) Compute the equilibrium price and quantity in this market.
b) If the price = $3, then what is happening in this market? Briefly explain.
c) If the price = $0.50, then what is happening in this market? Briefly explain.
d) If the demand function changes to Qdvideos = 26 - 6P videos, given the original supply function, illustrate what is the new equilibrium price and quantity?
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Do you think the industry environment is significantly dissimilar today.
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