Question: It currently costs $500 to install a new shower in your house. A new law requires each new shower to come with digital hot and

It currently costs $500 to install a new shower in your house. A new law requires each new shower to come with digital hot and cold water controls instead of the old-fashioned knobs that everyone uses today. Installing the digital controls costs the manufacturers an extra $200 per shower. Customers value the digital controls at $50 per shower.
a. Illustrate how the demand and supply curves for showers shift as a result of the new law.
b. What happens to the price of a new shower? (Give either the exact new price or a range in which the new price must fall.)
c. Who gains from this new law: Buyers, sellers, both, or neither? Justify your answer.

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