Reference no: EM133065501

Continuing your analysis of the competitive US manufacturing industry from Question 1, with demand of Q _d = 500 - 8P and supply of Q_s = 4P - 100, suppose a technological innovation causes the supply curve to increase, shifting the curve down by $15 for every given quantity Q. 

1. Determine the new supply equation. 
2. Solve for equilibrium price P₂ and quantity Q₂.
3. Depict the original supply S₁, the new supply S₂, and the original demand D₁ on the usual P, Q diagram. Label all intercepts (including two intercepts for the demand curve and one intercept for the supply curve). Clearly indicate and label the new market equilibrium.
4. Graphically indicate the areas of Consumer Surplus (CS₂) and Producer Surplus (PS₂) that resulted from the new market equilibrium. 
5. Compute the values of Consumer Surplus (CS₂) and Producer Surplus (PS₂) associated with the new market equilibrium, clearly indicating the units that CS and PS are measured in.
6. Who has benefited from technological innovation, based on the comparison of CS and PS in Questions 1 and 2? Consumers, producers, or both? Why? (Narrative response; suggested length of three to four sentences or one paragraph.) 

Please explain detail 6 points separately with graph and calculation to understand the whole question 2