The accompanying table gives the annual Canadian demand and supply schedules for pickup trucks.

a. Plot the demand and supply curves using these schedules. Indicate the equilibrium price and quantity on your diagram.

b. Suppose the tires used on pickup trucks are found to be defective. What would you expect to happen in the market for pickup trucks? Show this on your diagram.

c. Suppose that Transport Canada imposes costly regulations on manufacturers that cause them to reduce supply by one-third at any given price. Calculate and plot the new supply schedule and indicate the new equilibrium price and quantity on your diagram.

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Quantity of trucks demanded (milllons) Quantity of trucks supplled (millons) Price of truck $20,000 2.0 1.4 25,000 1.8 1.5 30,000 1.6 1.6 35,000 1.4 1.7 40,000 1.2 1.8