Use the following information:

The table shows the demand and supply schedules for sandbags before and during a major flood. During the flood, suppose that the government gave all families an equal quantity of sandbags. Resale of sandbags is not permitted.

Requirements:

1. How would total surplus and the price of a sandbag change?

2. Would the outcome be more efficient than if the government took no action? Explain

Price (dollars per Quantity demanded bag) before flood 1 2 3 4 5 6 7 8 40 35 30 25 20 15 10 5 0 Quantity demanded during flood (thousands of bags) 70 65 60 55 50 45 40 35 30 0 5 10 15 20 25 30 35 40 Quantity supplied