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Assume the following data describe the gasoline market: Price per gallon $2.00 2.25 2.50 2.75 3.00 3.25 3.50 Quantity Demanded 32 30 29 28 22 21 20 Quantity Supplied 16 20 24 28 32 36 40
(a) What is the equilibrium price?
(b) If supply at every price is increased by 10 gallons, what will the new equilibrium price be?
(c) If the government freezes the price of gasoline at (a)'s equilibrium price, how much of a surplus or shortage will exist when supply is increased as described in (b)?
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