1. In recent weeks gasoline prices have increased significantly, and in many parts of the United States it is above $4.00 per gallon.

(a) What impact will this higher price of gasoline have on the supply curve of airline travel, assuming that gasoline is an input for airline travel.

(b) What happens to the equilibrium price and quantity of airline travel?

Please explain and include a graph with the demand and supply curves of airline tickets. You must include one graph only and this graph should show both the original and new demand and supply curves (if the curves shift) and must also indicate the change in equilibrium price and quantity (if any).

(c) If the demand for hybrid cars increases because of the recent increase in price of gasoline, what impact will this have on the equilibrium price of hybrid cars? Please explain.