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Exercise 1: Given that the demand curve for gizmos is P = 60 - 3Qd and the supply curve is P = 40 + QS;

  1. Calculate the shortage or excess supply of gizmos if the price of gizmos is $48.
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  2. Calculate the equilibrium amount of gizmos exchanged. (Q*)
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  3. Calculate the equilibrium price of gizmos exchanged. (P*)
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  4. New technology causes an outward shift in the supply curve. Calculate the new equilibrium quantity (Q*) exchanged if this new curve is P = 30 + QS, and ....
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  5. Calculate the new equilibrium price of gizmos (P*).
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