Question: Suppose the demand for a product is Q_D = 100 – 0.04P and supply is Q^s = -20 + 0.06* P.

a. What is the equilibrium market price and quantity? Show your calculations. Sketch the demand and supply curves and show the equilibrium outcomes.

b. Suppose a price ceiling is imposed where the new price is 75% of the equilibrium price calculated in (a). What are the new price and quantity in the market?

c. Suppose instead of the price ceiling the supply curve changes to Qs = 0 .06 P, calculate the new price and quantity in the market. In a new diagram, sketch the demand and supply curves and show the equilibrium outcome.