Question 2: Demand/Supply (Chapter 3)

The demand and supply schedules for gun are provided below:

Price (cents per pack)	Millions of packs a week
Quantity demanded	Quantity supplied
20	180	60
40	140	100
60	100	140
80	60	180

1. Suppose that the price of gum is 70 cents a pack. Describe the situation in the gum market (i.e. excess demand, excess supply or equilibrium)and explain how the price of gum adjusts.
2. Suppose that the price of gum is 30 cents a pack. Describe the situation in the gum market (i.e. excess demand, excess supply or equilibrium) and explain how the price of gum adjusts.
3. Now suppose that a fire destroys some factories that produce gum and the quantity of gum supplied decreases by 40 million packs a week at each price. Explain what happens in the market for gum and draw a graph to illustrate the changes.
4. At the same time as the fire in part (c), the teenage population increases and the quantity of gum demanded increases by 40 million packs a week at each price. What is the new market equilibrium? Show the changes on your graph. (NEED ANSWER FOR THIS QUESTION)