4) The table above gives the supply and demand schedules for scooters. Because o

Question

4) The table above gives the supply and demand schedules for scooters. Because of increased injuries sustained by children riding scooters, Citizens Against Scooter Accidents successfully lobbies the government to impose a price floor of $80.00 on scooters.

a. What is the quantity demanded and supplied after the price floor has been imposed?

b. Is there any shortage or surplus at this price floor? If so, how much?

c. If the price floor is raised to $110.00, what is the quantity demanded and supplied?

d. At a price floor of $110.00, is there any shortage or surplus? If so, how much?

uantity suppli (scooters per week) uantity deman rice (d ollars per scooter) 70 S0 90 100 110 120 (scooters per week) 110 100 90 S0 70 60 S0 100 120 140 160

Explanation / Answer

Ans)

a)
At a price floor of 80 quantity demanded is 110 and quantity supplied is 80.
b.
Yes, since the quantity demanded is more than the quantity supplied there is a shortage of 110-80=30 units.
c.
At a price of 110 quantity demanded is 80 and quantity supplied is 140.
d.
Yes,there is a surplus of 140-110=30 units.

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