Background:

In 2019, North Carolina consumed 114,576 thousand barrels of gasoline which is about 4.8 billion gallons.Gasoline demand and supply are both quite inelastic, which means that they don't respond much to changes in prices.Short-run demand elasticities have been estimated around -0.2.This means that if the price of gasoline increases by 10%, consumption of gasoline decreases by 2%.Supply elasticities are estimated around 0.1 which means that if the price of gasoline increases by 10%, the supply of gasoline increases by 1%.The supply and demand curves below are roughly consistent with these facts.

Let annual demand for gasoline in North Carolina be given by D(p)= 6- 0.5p where demand is measured in billions of gallons and is the price in $ per gallon.Let annual supply in North Carolina be given by S(p)= 4.2+0.4p , where supply is also in billions of gallons.

2) Supply curve 5(3)) 2 4-.2 + 0.43:? a. Sketch the supply curve. Don't forget to put price on the yaxis! (Hint: I recommend desmos.corn. To get the axes correct in desmos.con1, you need to enter 1: = 4.2 + 0.4y.) 13. Quantity supplied: che gasoline price is $3, how much gasoline is supplied? If the price is $2? If the price is $1.50? i. How does quantity m change as the price falls? c. Revenues: Ifthe gasoline price is $3, how much revenue would NC gas stations receive om gasoline? Ifthe price is $2? Ifthe price is $1.50? i. Hovvr do revenues change as the price falls? (1. Extra credit: Producer surplus is a little tricky with this supply curve. Can you calculate it if the price is $2? (Hint: It is a trapezoid for this supply curve.)