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Question: 5 35 points consider a market with demand function dpe20...

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5. (35 points) Consider a market with demand function D(p:e-20- , where θ > 0 determines demand sensitivity to price, and supply function S(p) p2 (a) (10 points) Find the equilibrium price as a function of θ, pE(8). (b) (5 points) Draw the demand and supply functions and identify the market equilibrium points for θ 1 and θ 2. (c) (5 points) Draw the function p(e) (d) (15 points) Compute pE,(8). If the initial sensitivity parameter is θ-1, how does the equilibrium price change when 8 increases by 0.13

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