Assume that the

market for cars that use gasoline

is in equilibrium. Climate change is a

real threat to our planet. To reduce car emissions, the government is giving buyers subsidies

to buy more electric cars,

a substitute of gasoline-using cars

.

At the same time

,

suppliers of gas have found a

new technology that helps in the clean production of

gas

.

Based on this scenario, draw the graphs and explain what happens to equilibrium price and

equilibrium quantity. Your graphs should be labeled completely, including the x- and y-axes,

for full points. You must also give reasons as to why you shifted the demand and supply

curves the way you did.