2. Suppose the demand for a six-pack of Flying Monkey's Hoptical Illusion is given by: $Q^d = 3000 - 100P$ (1) and the supply by: $Q^s = 250 + 150P$ (2) (a) Re-write each of these equations as inverse demand/supply curves (that is $P = ...$). (b) Draw these inverse demand curves. (c) Solve for the equilibrium price and quantity of Hoptical Illusion. (d) Now suppose that due to the Flying Monkey's brewery being taken over by Molson Breweries the demand for this beer drops. What do you think will happen to the equilibrium price and quantity? Illustrate your answer with a diagram. (e) The fall in demand causes the demand curve to change to: $Q^d = 1000 - 100P$ (3) Is this a change in the slope or intercept (or both) of the demand curve? (f) Using this new demand curve solve for the new equilibrium price and quantity.
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