2. (4pts) Use a Supply and Demand graph of the bottled water market to explain how elasticity affects the impact of an increase in the price of gasoline on the equilibrium P & Q of bottled water (0.5pts) Draw a relatively steep demand curve, labeled D, and a regular supply curve (the supply curve can be the same as in question 1). [Again, just free draw them] Label equilibrium P, & Q1 . (0.5 pts) Draw a new flatter demand line, labeled D, that goes through the initial equilibrium point Shift the same curve as in question #1 to show the impact of the gasoline price increase. Label it either S' of D'. (0.5pts) Label the new equilibrium P, & Q, for the steep Demand line. (0.5pts) Label the new equilibrium P; & Q; for the flatter Demand line. (2pts) Comparing the two equilibrium shifts, explain how elasticity impacts the magnitude of the adjustment in P & Q when the price of gasoline increases. Be sure to specify which D curve is relatively elastic and which is relatively inelastic. 3. (Bpts) Estimate the demand equation for bottled water. Download the Excel file, "Data for Case Study 1" in Camino that contains the relevant data (save it to your hard drive). You will find three sets of columns: * The first set provides information about observations of variables that are relevant to Demand during the summer. The second set of columns provides information about observations of variables that are relevant to Demand during the winter. * The third set of columns provides information about observations of variables that are relevant to Supply year round (both summer and winter)