Keanu Reeves at a recent Microsoft event publicising the next generation Xbox console

Consider the following supply and demand schedules for Xbox consoles.

Price ($) Quantity Demanded (thousands per month) Quantity Supplied (thousands per month) 120 59 23 140 51 27 160 43 31 180 35 35 200 27 39 220 19 43

Question 1 State the market equilibrium price and quantity of consoles. (2 marks)

Question 2 Sketch the market for consoles in a diagram, making sure to include all appropriate labels. (2 marks)

Question 3 If Microsoft decided to lower the price of a console to $140, would this result in a shortage or a surplus? Explain why. What is the size of the shortage or surplus? (4 marks)

Question 4 Given that Keanu Reeves is featured in an Xbox game, what effect might this have on the demand for these consoles, and which way would the demand curve shift? (2 marks)