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(10 marks) The market for digital video discs (DVDs) has supply and demand curves given by...

  1. The market for digital video discs (DVDs) has supply and demand curves given by P = 2Qs and P = 42 - Qd, respectively, where P is in $/DVD and Qs and Qd are in DVDs. Construct and label a diagram (instead of drawing the actual graph, briefly explain the graph instead. Explain all the curves, shifts, points and axis, etc).
  1. How many units will be traded at a price of $35? At a price of $14? Which participants in the market (buyers/sellers) will be dissatisfied at these prices and why?
  2. What quantity of DVDs at which price will be sold at equilibrium?
  3. What is the total revenue from DVD sales? Where is it shown on your diagram?

(instead of drawing the actual graph, briefly explain the graph instead. Explain all the curves, shifts, points and axis, intersections and labels etc).

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