Question

For the following set of demand and supply, equations do the following,

- Find the equilibrium price and equilibrium quantity for each set of equations.
- Draw each set of equations in a clearly labeled graph and show the equilibrium P and Q.
- Calculate the consumer surplus at the equilibrium P and Q found in b.
- If the price were to increase, calculate the loss in the consumer surplus. Calculate the total new consumer surplus.
- If the price were to decrease, calculate the gain in the consumer surplus. Calculate the total new consumer surplus.
- Draw c, d and e showing all the points/areas.

**Show all your workings***

Equation Set One

P=50-2Q

P=20+0.5Q

Equation Set Two

P=5000-0.5Q

P=250+0.5Q

Answer #1

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