Consider the market for bicycles, with Supply and Demand given by the following: : = 20 : = 220 2 1. What is the free-market price (p*) and Quantity (Q*)? 2. Draw both the Demand and Supply Curves. Plot the free-market equilibrium point and any x-intercepts and y-intercepts. 3. What is the Consumer Surplus (CS) and Producer Surplus (PS) in free-market equilibrium? Suppose that the government introduces a price-floor of $60. 4. What is the change in Consumer Surplus (CS) and Producer Surplus (PS) as a result of this first price floor?

Suppose instead that the government removes the old price floor and instead introduces a new price floor of $100. 5. What is the new Consumer Surplus (CS) and Producer Surplus (PS) as a result of this new price floor? Suppose instead now that there are no price floors, but instead that Supply was perfectly elastic at a price of $70. Demand remains the same (as above). 6. What is the new free-market price (p*) and Quantity (Q*)? 7. What is the Consumer Surplus (CS) and Producer Surplus (PS) in this new free-market equilibrium? 1-7 Please!