Question

.  Assume the following data describe the gasoline market:

 

(a) Graph the demand and supply curves.

 

(b) What is the equilibrium price?

 

(c) If supply at every price is reduced by 6 gallons, what will the new equilibrium price be?

 

(d) If the government freezes the price of gasoline at its initial equilibrium price, how much of a surplus or shortage will exist when supply is reduced as described in part (c)?

 

 

Price per gallon
Quantity demanded
Quantity supplied
$2.00 2.25 2.50 2.75 3.00 3.25 3.50
36 35 34 33 32 31 30
24 26 28 30 32 34 36
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Transcribed Image Text

Price per gallon Quantity demanded Quantity supplied $2.00 2.25 2.50 2.75 3.00 3.25 3.50 36 35 34 33 32 31 30 24 26 28 30 32 34 36