Find the equilibrium price and quantity

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Suppose at the initial equilibrium P* = 1, Q* = 5. At that point, price elasticity of demand and price elasticity of supply are ? = -.2, and η = .5, respectively. Due to changes in preferences of consumers, demand shifts left by 2 (now, at each price, demand is lower compared to the initial demand by 2). Find the equilibrium price and quantity after the shift of the demand curve. Assume supply and demand functions are linear in p. Show your work

Reference no: EM131507351

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