The widget industry is perfectly competitive. The industry demand and supply functions for widgets are given below.

Qd = 424 – 40P

Qs = 40 + 8P

a. What is the equilibrium price and quantity for the industry?

b. If the government establishes a price floor of $9, explain what will result in terms of excess demand or supply.

c. If the government establishes a price ceiling of $6, explain what will result in terms of excess demand or supply.

d. Assume the supply curve shifts to

Qs’ = 34 + 12P

What is the new equilibrium price and quantity?

e. Assume in addition to the supply curve shifting, the demand curve shifts to

Qd’ = 484 – 38P

What happens to equilibrium price and output?