Problem Set #3

First, equate supply and demand to determine equilibrium quantity: 50 + Q = 200 - 2Q, or QEQ = 50. Thus, the equilibrium quantity is 50 million pounds. Substituting QEQ equals 50 into either the supply or demand equation to determine price, we find: PS = 50 + 50 = 100 and PD = 200 - (2)(50) = 100 cents. The equilibrium price P is $1 (100 cents). ................
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