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The table below shows the demand and supply of coats in Small Town.
a. What is the equilibrium price of coats?
b. Will a shortage or surplus occur?
c. At what price will the most coats sold be sold?
d. The mayor of SmallTown in order to "help the poor by making coats cheaper", imposes a price ceiling of $40. How many coats will be bought and sold? Will a surplus or shortage of coats occur?
e. The mayor of Small Town, in order to "help protect our coat industry," imposes a price floor of $80 instead. How many coats will be bought and sold? Will a shortage of coats or surplus occur?
To answer all the questions, it will be easy for you to draw the supply and demand graph first to see the whole picture. Keep it up!
Price Quantity of Coats demanded (per day) Quantity of Coats Supplied (per day)
$80 50 110
$70 60 90
$60 70 70
$50 80 50
$40 90 30
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