Suppose the supply and demand for milk is described by the following equations: Qd=600-100P,

Qs = -150+150P, where P is price in dollars . Qd is quantity demanded in millions of gallons per year.
A. Create supply and demand tables corresponding to these equations.
B. Graph supply and demand and determine equilibrium price and quantity.
C. Confirm your answer to (b) by solving the equations mathematically.
D. Would a govt. set price of $4 create a surplus or a shortage of milk? How much?
Is $4 a price ceiling or a price floor?

A. To create supply and demand tables, we need to substitute different values of P into the equations and solve for Qd and Qs.

For the demand equation:
Qd = 600 - 100P

Let's substitute some values of P to obtain the corresponding values of Qd:

When P = $1:
Qd = 600 - 100(1) = 500

When P = $2:
Qd = 600 - 100(2) = 400

When P = $3:
Qd = 600 - 100(3) = 300

When P = $4:
Qd = 600 - 100(4) = 200

When P = $5:
Qd = 600 - 100(5) = 100

Similarly, we can create a table for the supply equation:

For the supply equation:
Qs = -150 + 150P

Let's substitute some values of P to obtain the corresponding values of Qs:

When P = $1:
Qs = -150 + 150(1) = 0

When P = $2:
Qs = -150 + 150(2) = 150

When P = $3:
Qs = -150 + 150(3) = 300

When P = $4:
Qs = -150 + 150(4) = 450

When P = $5:
Qs = -150 + 150(5) = 600

B. To graph supply and demand and determine equilibrium price and quantity, we plot the values from the tables on a graph with Qd and Qs on the y-axis and P on the x-axis. The equilibrium occurs when the quantity demanded (Qd) equals the quantity supplied (Qs).

By plotting the points from the tables, we can draw the supply and demand curves. The demand curve slopes downward from left to right, while the supply curve slopes upward from left to right.

The equilibrium price is the point where the supply and demand curves intersect. At this point, the quantity demanded equals the quantity supplied.

C. To confirm the answer graphically, we can find the point of intersection of the demand and supply curves. This is the equilibrium price and quantity.

D. To determine whether a government-set price of $4 would create a surplus or a shortage of milk, we need to compare the quantity demanded (Qd) with the quantity supplied (Qs) at that price.

Substitute P = $4 into both the demand and supply equations:

For demand:
Qd = 600 - 100(4) = 600 - 400 = 200

For supply:
Qs = -150 + 150(4) = -150 + 600 = 450

At a price of $4, the quantity demanded (200) is less than the quantity supplied (450). Therefore, there would be a surplus of milk.

A price of $4 is a price floor because it is above the equilibrium price. A price floor is a government-imposed minimum price that producers must receive, regardless of market conditions.