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Question:

Consider a market where quantity supplied = 1,500 - 3 x price, and quantity demanded = 2,000 - 5 x price. With respect to equilibrium price and quantity, there is:

A a stable market equilibrium.
explanation

1212There is a market equilibrium at a price of 250, where and . Although the supply curve is downward sloping, the equilibrium is stable because the supply curve intersects the demand curve from aboveā€”the slope of the supply curve (-1/3) is steeper than the slope of the demand curve (-1/5).

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