A market research has come up with the demand and supply schedules for gasoline in Motorville in the table below. Using this data, analyze the situation in the market for gas in Motorville.

Price(cents per gallon) Quantity demanded(thousands of gallons/week) Quantity supplied

2.90 80 20

3.00 70 30

3.10 60 40

3.20 50 50

3.30 40 60

3.40 30 70

3.50 20 80

A) Draw a figure showing the demand curve for gasoline and the supply curve for gasoline. What are the equilibrium price and quantity?

B) Suppose the price is $3.30. What happens to the market situation and how does the market adjust?

C) Suppose the price is $3.00. What happens to the market situation and how does the market adjust?

D) The market research report also predicts that a rise in the price of crude oil will decrease the quantity of gas supplied by 20 000 gallons a week at each price. Suppose the price of the crude oil does rise. Use your figure to show how this will affect the market for gas. How will the market adjust? What will be the new equilibrium price and quantity?