Chapter 3, Problem 21P

To determine

The following questions from the table given.

1. Plot the demand and supply curves these schedules. Indicate the equilibrium price and quantity on your diagram.
2. Suppose the tires used on pickup trucks are found to be defective. What would you expect to happen in the

   market for pickup trucks? Show this on your diagram.

3. Suppose that the U.S Department of Transportation imposes costly regulations of manufactures that cause them to reduce supply by one+-third at any given price. Calculate and plot the new supply schedule and indicate the new equilibrium price and quantity on your diagram.

Concept Introduction:

Demand: The demand is defined as the ability to pay for goods and services.

Supply: The supply is the ability of the seller to produce the goods and services and sell it at the prevailing price

Demand curve: Demand curve is the graphical representation of the demand schedule.

Supply curve: Supply curve is the graphical representation of the supply schedule