Suppose that the supply function for gasoline-powered cars is Qs = 7,800,000 cars + 1300 cars * P2 − 1200 cars * P HYBRID2 where Qs is the quantity of gasoline cars supplied, P is the price of a gasoline-powered car, and PHYBRID is the price of a hybrid car. Suppose the price of a hybrid car is $39,000.

a. Are hybrids a complement in production or a substitute in production for gasolinepowered cars?

b. Suppose the price of a gasoline-powered car is $30,000 and the price of a hybrid car rises by $2,000. What is the effect on the supply curve of gasoline-powered cars?

Draw a figure showing the initial supply curve and the new supply curve after the increase in the price of the hybrid.