4.Answer the questions below using the data in the following table, which shows a market for a product that has significant social benefits.

Price Quantity Demanded Quantity Supplied

16 20 70

12 30 55

8 45 40

4 25 25

2 35 20

a. What would the equilibrium price and quantity be?

b. Suppose the price is currently at $2. What problem would exist in the economy? What would you expect to happen to price?

c. Suppose the price is currently $12. What problem exists in the economy? What would you expect to happen to price?

d. Using the midpoint method, calculate the price elasticity of demand if price changes from $12 to $16. Is this elastic or inelastic?

e. A government subsidy is given to consumers that increases quantity demand by 25 units at each price. What is the new equilibrium price and quantity?