Homework Answers
New supply is 40% more than original supply which means Q + 0.4Q or (-9 + 9P)*1.4.
This becomes Q = -12.6 + 12.6P
Demand is Q = 27 - 3P
New price is found at Qd = Qs
27 - 3P = -12.6 + 12.6P
39.6 = 15.6P
P = 2.54
Hence price is decreased from $3 to $2.54, which means price is reduced by $0.46.
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