Question: Suppose the demand for guitars in State College is given by Qd = 9000 - 12P where Qd is the quantity demanded, and P is the price of guitars. Also, suppose the supply of guitars is given by Qs = 9P - 3852, where Qs is the quantity supplied of guitars.
Q1. Calculate the equilibrium price of guitars and the equilibrium quantity of guitars in State College. Show your work.
Q2. Suppose the actual price of guitars is $600. Determine if there is a shortage, a surplus, or if the market is in equilibrium at a price of $600. If there is a shortage or surplus, calculate how much the shortage or surplus is.
Q3. Given your answer to b), is the price of guitars likely to rise, fall, or stay the same?