Question: Given the demand and the supply functions below: Supply function: P = 0.2Q - 40 Demand function: P = - 0.2Q + 120 Find the

  1. Given the demand and the supply functions below:

Supply function: P = 0.2Q - 40

Demand function: P = - 0.2Q + 120

  1. Find the equilibrium price and quantity, draw a diagram to show your answer.
  2. Suppose the cost of production increases by $7 per unit, find the new supply curve, the new equilibrium price and quantity.
  3. Find the change in consumer expenditure.

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