Quantity demanded Quantity supplied (millions of gallons) Price (millions per gallon of gallons) $10.00 100 500 Rectangula 8.00 200 400 6.00 300 300 4.00 400 200 2.00 500 100

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Market researches have studied the market for milk,and their estimates for the supply of and the demand for milk per month are as follows:
a.Using the data,graph the demand for and the supply for milk.Identify the equilibrium point as E,and use dotted lines to connect E to the equilibrium price onthe price axis and the equilibrium quantity on the quantity axis.
b.Suppose the government enacts amilk price support of $8per gallon.Indicate this action on your graph,and explain the effect on the milk market?Why would the government establish such a price support?
c.Now assume the government decides to set a price ceiling of $4 dollar per gallon.Show and explain how this legal price effects your graph of the milk market.What objective could the government be trying to achieve by establishing such a price ceiling?

Quantity
demanded
Quantity
supplied
(millions
of gallons)
Price
(millions
per gallon
of gallons)
$10.00
100
500
Rectangula
8.00
200
400
6.00
300
300
4.00
400
200
2.00
500
100
Transcribed Image Text:Quantity demanded Quantity supplied (millions of gallons) Price (millions per gallon of gallons) $10.00 100 500 Rectangula 8.00 200 400 6.00 300 300 4.00 400 200 2.00 500 100
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