Given the following table, plot the demand and supply curves for coffee. Price Quantity Demanded Quantity Supplied

$7 5 15 5 10 10 3 15 5

Would $3 be considered an effective (i.e., binding) price ceiling?

With an effective price ceiling, what will happen to the market for cheese? Be specific.

If the price ceiling was removed from the model, what will happen to price, quantity demanded, and quantity supplied? Be specific.

What effect would a $7 price ceiling have on this market? What price and quantity will show up in the market?

8. Refer to the diagram posted with the problem set instructions. If the price floor is binding, determine:

a. the area of consumer surplus.

b. the area of producer surplus.

c. the area of deadweight loss.