The demand and supply schedules for cherries are as follows:

Price

($/pound)

Quantity demanded (thousands of pounds/week)

Quantity supplied (thousands of pounds/week)

5

320

0

7

280

30

9

240

60

11

220

90

13

180

120

15

140

140

17

100

160

19

60

180

a. Determine the market equilibrium price and quantity of cherries.

b. If a price ceiling is imposed at $13 per pound, is this price ceiling binding? What is the resulting market price, quantity sold and the shortage?

c. As sellers complain about the low price of cherries, theprice ceilingincreases to $17. What is the new market price and quantity sold? Is thisprice ceilingbinding? Why or why not?

d. Would aprice floorfor cherries at $17 be binding? What would be the resulting price, quantity sold, and would there be a surplus or shortage?

e. Would a price floor at $17 create a dead weight loss? Why or why not? What is a dead weight loss and how does the marginal cost compare to the marginal benefit at the last unit traded? Explain.