Suppose that the quantity demanded and quantity supplied in the market for milk is as follows:

a. What is the equilibrium price and quantity of milk?
b. If the government places a price ceiling of $2 on milk, will there be a shortage or surplus of milk? How large will it be? How many gallons of milk will be sold?

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Price per Gallon $5 $4 $3 $2 $1 Quantity Demanded 1,000 2,000 3,500 4,100 6,000 Quantity Supplied 5,000 4,500 3,500 2,000 1,000