4.Use the graph below to answer the questions that follow. Be sure to show your calculations.

a.What would the equilibrium price and quantity be?

b.Suppose the price is currently at $4. What problem would exist in the economy? What would you expect to happen to price? Explain your answer.

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

d.What is the slope of the demand curve between point E and point C?

e.Using the midpoint method, calculate the elasticity of demand if price changes from $12 to $8. Is this elastic or inelastic?

f.Using the midpoint method, calculate the elasticity of supply if price changes from $8 to $12. Is this elastic or inelastic?

g.Explain the effect a $12 price floor would have on this market. Would this be a binding price floor?

h.Why would policymakers choose to impose a price ceiling or price floor?