The market demand for paper clips is ! = 50 − 0.5. The market supply for paper clips is = − 20 0.5.
a) What is the equilibrium price and quantity of paper clips in this market?
b) Plot and label the supply and demand curves for paper clips.
c) A breakthrough in paper clip manufacturing technology is discovered which reduces every paper clip manufacturing firm's marginal cost by $20. Plot the new curve(s) on your plot from part b. What is the new equilibrium price and quantity?