Assume the following data describe the gasoline market:

(LO 3-3)

Price

per gallon

$2.00

$2.25

$2.50

$2.75

$3.00

$3.25

$3.50

Quantity

demanded

36

35

34

33

32

31

30

Quantity

supplied

24

26

28

30

32

34

36

(a) Graph the demand and supply curves.

(b) What is the equilibrium price?

(c) If supply at every price is reduced by 6 gallons, what will the new equilibrium price

be?

(d) If the government freezes the price of gasoline at its initial equilibrium price, how

much of a surplus or shortage will exist when supply is reduced as described in part (c)

above?