Price per litre ($) Quantity Deman d ed in 000 Quantity Supplied in 000 litres (per M o nth) 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...

1. Construct the demand and supply curves for gasoline to show the market equilibrium for gasoline.


2. 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.


3. Explain the effect of the subsidy on the market forces and the equilibrium point.


4. Describe
   THREE (3)
   other changes that could have the same effect on market supply of gasoline as the imposition of the subsidy in
   (B)
   above.

Nb. Please answer question number 4.