College in the Schools Name: Common Assignment #1 Hour: Supply and Demand Worksheet The following table shows the demand and supply schedules for gasoline in Minnesota. Average Price per Gallons Purchased Gallons Refined per Gallon per Day (in millions) Day (in millions) $3.80 3.0 17.0 $3.60 3.5 15.5 $3.40 4.0 14.0 $3.20 4.5 12.5 $3.00 5.0 11.0 $2.80 5.5 9.5 $2.60 6.0 8.0 $2.40 6.5 6.5 $2.20 7.0 5.0 $2.00 7.5 3.5 $1.80 8.0 2.0 $1.60 8.5 .5 $1.40 9.0 0 (A) Using graph paper, draw the supply and demand curves for gasoline on a clearly labeled diagram. 4 points) (B) What is the equilibrium price and quantity? (2 points) Price: Quantity: (C) An outraged consumer advocacy group feels that gasoline prices are too high. In order to control the gas prices the government institutes a price ceiling of $2.20 per gallon of gasoline. Using the information from the supply and demand schedule provided above, draw in the new price ceiling on the graph, label it PC, and show the effect of this market intervention. (1 point) Calculate the shortage/surplus that will result from this policy change. (1 point) Calculate the Consumer and Producer Surplus at Equilibrium (2 points). Shade in and calculate the Deadweight Loss after the new price ceiling. (1 point) (D) How might this shortage/surplus affect the market and consumer behavior? ( 2 points) (E) The executives from Exxonmobil influence the Department of Energy and decide to help domestic oil producers by imposing a new price floor of $2.80 per gallon of gasoline. Using the information from the supply and demand schedule provided above, draw in the new price floor on the graph, label it PF, and show the effect of this market intervention. (1 point) Calculate the shortage/surplus that will result from this policy change. (1 point)