(Solved): 7. Consider The Market For Cheese Curds In The Fictional Town Of Willows, WI. Suppose The Demand For...

7. Consider the market for cheese curds in the fictional town of Willows, WI. Suppose the

demand for cheese curds is represented by

Q_d = 30−4P and the supply of cheese curds is represented by Q_s = 2P

(a) What are the equilibrium price and quantity in this market?

(b) Now suppose the residents of Willows become concerned about a rare, cheese-induced

disease, and demand for cheese curds is half of what it was before. (In other words, at

any given price level, consumers demand half of what they would have before.) What is

the new equilibrium price and quantity? Why is the new equilibrium quantity not simply

half the equilibrium quantity from part (a)?

(c) Going back to the original demand and supply curves from part (a), now suppose that

a breakthrough in cheese curd production doubles the supply of cheese curds. (In other

words, at any given price level, the supply is twice as much as it would have been before.)

What is the new equilibrium price and quantity? Why is the new equilibrium quantity

not simply double the equilibrium quantity from part (a)?