c. Now suppose demand for this good jumps to QD' = 220 – 6P. What will happen in this market immediately afterwards? (i.e. before price has the chance to adjust) Draw a graph, showing the relevant...

Extracted text: c. Now suppose demand for this good jumps to QD' = 220 – 6P. What will happen in this market immediately afterwards? (i.e. before price has the chance to adjust) Draw a graph, showing the relevant quantities and surpluses. Show whether either producer or consumer surplus increase. d. Continuing from part c, evaluate what happens as price adjusts. By how much do the quantities supplied and demanded change? Does total surplus increase (assuming no externalities)? [Note that we are still in the short run, so new firms are not able to enter the market.]


Extracted text: 2. Consider a market where demand is described by QD = 140 – 6P. An individual firm in this market can supply quantity q = P – 2 in the short run, for any price above 2. (Quantities are in thousands of units per year, prices are in US dollars per unit.)