(From Midterm 2014)The yearly demand for milk in the European Union (E.U.) is= 590 1.25where quantities are measured in millions of tons and prices in euros per ton.

a.Graph the demand function for milk by placingQon the x-axis andPon the y-axis. Make sure that you indicate the choke price and the numerical value of theQ-intercept of the demand function.

=5901.25.

1. Graph the demand and supply functions of milk on a new graph. Make sure that you
2. indicate the P-intercept of the supply function.
3. Whatwill the equilibrium price and quantity be after the market for milk is deregulated?
4. Indicate the equilibrium in the graph of parte.
5. Under these circumstances, what will be the numerical value of the change in total surplus in the E.U. due to the deregulation of the market for milk? Illustrate the change in total surplus on the graph that you drew in parte.