Find the equilibrium price

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Suppose the market demand for a good consists of two consumers, 1 and 2, where their respective individual demands are given by: Di (p) = max[200 - 4p,0] and D2 (p) = max [100 - p, 0].

a) On one diagram graph the two demand curves as well as the resulting market demand curve. Label the intercepts appropriately.

b) Suppose supply is given by p - 40, that is, the supply is perfectly elastic. Find the amount purchased by each consumer. Illustrate your answer with a graph.

c) Now, suppose instead the supply is given by q =20. Find the equilibrium price. Illustrate your answer with a graph.

Reference no: EM133063254

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