. (10%) Illustrate the following situation by using supply and demand curve. (Only graph needed)

a. The federal government "supports" the price of wheat by paying farmers not to plant wheat onsome of their land. What will happen to the equilibrium price and the equilibrium quantity?

b. Both income and crude oil prices increase. What will happen to the equilibrium price and theequilibrium quantity in the gasoline market? (Crude oil is used to produce gasoline)

2. (15%) A travel company has hired a management consulting company to analyze demand in 26regional markets for one of its major products: a guided tour to a particular country. The equationfor the quantity demanded is Q = 1500 - 4p + 5A + 10I + 3Px Where

Q = amount of the product demanded

P = Price of the product in dollars

A = advertising expenditure in dollars I = Income in dollars

Px = price of other travel products that are provided by a competing travel company.

a. Determine the simplified demand function for this product using the following data. (Provideprocedure)

P = $400, A = $20,000, I = $15,000, Px = $500

b. Suppose people's income drops to $10,000. How much would this firm have to increase itsadvertising in order to counteract the drop in income? (Provide procedure)