The market for pineapples is characterized by the following supply and demand functions: Q_d = 1000 – 40P Q_s = 50P + 100 Solve for the equilibrium price and quantity. A severe blight reduces the quantity of pineapples produced at each price by 100.
What is the new supply function? Use the supply function you found in b) to solve for the new equilibrium price and quantity. Is the change from a) to c) a change in supply or a change in the quantity supplied? Why?
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