(Figure: Price Floor) Refer to the graph. Assume a price floor is implemented at $35. Using the graph answer the following questions: (a) How many units are buyers willing to buy after the institution of the price floor? (b) How many units are sellers willi to sell after the institution of the price floor? (c) After the institution of the price floor, how many units are actually sold in this market? (d) Does the price floor cause a shortage or a surplus? How many units is this shortage or surplus? Price $40 $35 $30 $25 $20 $5 | I I Supply 25 30 40 50 60 75 Demand 100 Quantity

Question 12 Cecilia usually bought several pairs of designer shoes each year, but she lost her job this year. Which graph below shows what happens to her demand for designer shoes? P₁ Price Price P₂ P₁ D₂ Q₂ I I Q2 D₁ Q₁ S Q₁ Quantity Quantity

10. Market equilibrium The following table shows the monthly demand and supply in the market for shoes in San Francisco. Price Quantity Demanded Quantity Supplied (Dollars per pair of shoes) (Pairs of shoes) (Pairs of shoes) 20 1,650 300 40 1,200 750 60 600 1,050 80 300 1,350 100 150 1,500 On the following graph, plot the demand for shoes using the blue point (circle symbol). Next, plot the supply of shoes using the orange point (square symbol). Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in the market for shoes. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 120 100 Demand 80 Supply 60 Equilibrium 40 20 300 600 900 1200 1500 1800 QUANTITY (Pairs of shoes) PRICE (Dollars per pair of shoes)

PRICE (Dollars per gallon) Price (Dollars per gallon) 10 12 11 a 10 0 8 D 6 a 4 2 Use the data in the preceding table to plot the demand and supply curves for milk on the following graph. Use the blue points (circle symbol) to plot the demand curve. Then use the orange points (square symbol) to plot the supply curve. Line segments will automatically connect the points. ? 100 The equilibrium market price is $ The new quantity supplied is Quantity Demanded (Millions of gallons) 100 of 200 300 400 200 300 400 QUANTITY (Millions of gallons) 500 The new quantity supplied is of Quantity Supplied (Millions of gallons) 500 500 400 600 Suppose the government enacts a milk price support of $7.00 per gallon. 300 200 100 -O Demand Use the green line (triangle symbol) to plot the new price line on the preceding graph. ***]* Supply Government Price 1 Government Price 2 and the equilibrium quantity is Suppose now that the government decides to set a price ceiling of $4.00 per gallon. Use the purple…