Open questions:

2. The aggregate demand is given by the equation 09. = 8,400 400139 + 601 lPam, where 03' represents the market quantity demanded in thousands of gallons per week, I equals the household income in 1,000s, and PM: equals the average price of an automobile in 1,000s. Assume that the household income is 50, and the price of automobiles is 20. Determine the equilibrium price and quantity of gasoline in this market and identify the exogenous variables. 3. Determine the amount of excess demand or supply if price is {-32 and characterize the local market for gasoline. 4. Calculate the amount of deadweight loss and the total surplus that would result from a price oor imposed at a level of 65. Interpret. 5. Determine the price elasticity of demand at the market equilibrium and interpret. 6. Characterize gasoline and gasoline and automobiles using the income elasticity of demand and the cross-price elasticity, respectively