The table below shows the demand and supply schedule for gasoline in a hypothetical country called Microland. Price per litre ($) Quantity Demanded in 000 Quantity Supplied in 000   litres (per Month) litres (per month) 11 . 0 27 10   2 25 9   4 23 8   6 20 7   8 17 6   10 15 5   12 12 4   14 10 3   16 7 2   18 5 1   3 3   1a. Construct the demand and supply curves for gasoline to show the market equilibrium for gasoline. 1b. Given a new government policy in Microland, Gasoline producers have started to obtain subsidies from the government. Construct a NEW diagram to show the impact of the subsidy on the market equilibrium

img' (a If po increases, what happens to the demand and supply of public transportation (shifts left/shifts right/doesn’t change) What happens to the equilibrium quantity and price for public transportation? (increase/decrease)   (b)At a given price p, as oil becomes more expensive (po increases), does the (own) price elasticity of demand for public transportation increase / decrease / stay the same?   (c) Calculate the cross-price elasticity of public transportation demand with respect to the oil price po, at the point p = 1 and po = 2. Are the two goods (public transportation and oil) substitutes or complements, or unrelated?

Demand Schedule     Supply Schedule P Q     P Q 10 30     10 80 9 35     9 74 8 40     8 68 7 45     7 62 6 50     6 56 5 55     5 50 4 60     4 44 3 65     3 38 2 70     2 32 1 75     1 26   1. Graph the demand and supply schedules (above). What are the (approximate) Price and Quantity in this market? 2. Assume that an increase in popularity of the product depicted above means that demand for the product increases by 10%. The means that at every price 10% more units are demanded. Create a column with this new information to the right of the old quantity demanded. 3. Graph this new information and determine the new equilibrium price and quantity.   P     10…

b) i. Draw a Demand and Supply diagram for Coffee Beans based on the demand and supply schedule below. Price ($/kg) Quantity Demanded (kg) Quantity Supplied (kg) 2 500,000 300,000 400,000 400,000 4 300,000 500,000 200,000 600,000 6 100,000 700,000 i. What is the equilibrium price and quantity of Coffee Beans? 3.