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30 June, 11:53

Market demand for rhododendrons in Ann Arbor is given by D (p) = 120 - 3p and the market supply is S (p) = 3p - 30. Show all your work to answer the questions below. (1) Calculate the equilibrium quantity and price. (2) Calculate the consumer surplus and the producer surplus.

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  1. 30 June, 14:20
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    Answer: The answer is price is 15 equilibrium quantity is 75 Consumer surplus is 60 Producer surplus is 90

    Explanation:

    D=120-3P

    S = 3P - 30

    At equilibrium Qd=QS

    120-3P=3P-30

    Collect like terms

    120-30=3P+3P

    Divide both sides by 6

    90/6=6P/6

    15=P

    P=15

    Substitute the value of P into equation 1

    120-3 (15)

    120-45

    =75

    To calculate the consumer surplus

    Equilibrium quantity-Price

    75-15

    =60

    To calculate producer surplus

    Equilibrium quantity + Price

    75+15

    =90
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