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1. Plot the following Price and Quantity combinations. Note that the points are given in the format (Quantity, Price).

(0, 25), (1, 20), (2, 15), (3, 10), (4, 5)

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2. Using the equation of a line, what is the algebraic formula of this demand curve?

 

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3. Suppose the equation of the line changes to P = -5*Q + 50. Compute the quantity demanded at each indicated price.

Price: $25, Quantity:

Price: $20, Quantity:

Price: $15, Quantity:

Price: $10, Quantity:

Price: $5, Quantity:

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4. Let's call the original demand curve (from Question 1) D1 and the new demand curve (from Question 3) D2. The original demand curve, D1, is shown in blue on the graph below. Now plot the points for this new demand curve, D2, on the graph as well.

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5. Use the formulas for the two demand curves to compute the quantity demanded shown by each curve at a price of $17.

Demand Curve D1: Price: $17, Quantity:

Demand Curve D2: Price: $17, Quantity:

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6. Describe what has happened to demand in this problem.



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