The accompanying table gives the annual U.S. demand and supply schedules for pickup trucks.

Price of truck Quantity of trucks demanded

(millions)

Quantity of trucks supplied

(millions)

$20,000 20 14 25,000 18 15 30,000 16 16 35,000 14 17 40,000 12 18

a. Plot the demand and supply curves using these schedules. Indicate the equilibrium price and quantity on your diagram.

b. 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.

c. Suppose that the U.S. Department of Transportation imposes costly regulations on manufacturers 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.