Exercise 4

The demand and supply schedule for gum are as follows:

Price
cents per pack
Quantity demanded
millions of packs / week
Quantity supplied
millions of packs / week
10 200 0
20 180 30
30 160 60
40 140 90
50 120 120
60 100 140
70 80 160
80 60 180
90 40 200

Suppose that a fire destroys one half of the gum-producing factories.  Supply decreases to one half of the amount shown in the above supply schedule.


After the fire:

Price
cents per pack
Quantity demanded
millions of packs / week
Quantity supplied
millions of packs / week
10 200 0
20 180 15
30 160 30
40 140 45
50 120 60
60 100 70
70 80 80
80 60 90
90 40 100