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Q#1

Juan’s demand curve for food is Y = 20 – 4P. Juan’s price elasticity of demand for food at price P* = -2/3. How much is P*? Use a graph to support your answer.

Q#2

In Afghanistan, coffee is illegal, so people sell coffee beans on the black market. The demand of coffee beans (Y) is Yd = 24 – P and the supply for coffee beans is Ys = 4P. Find the equilibrium price and quantity in the black market. Use a graph to support your answer.

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