Please use the second image by using the first image (homework 2= first image) *The tax is given as $2, but then it says to drop the demand curve by $1. That drop should have been $2.

In Merageville, if the price of gasoline is zero, daily quantity demanded is 1000 gallons. For every increase in price of 10 cents, daily quantity demanded drops by 10 gallons. At a price of zero, quantity supplied is zero, but for every increase in price of 10 cents, quantity supplied increases by 15 gallons. Draw a picture of supply and demand for gasoline, and demonstrate your answers to the questions below on this graph. a. If the current price is $1.00 lgallon, will there be a shortage or surplus, or an equilibrium in the gasoline market? How many gallons are traded in the market? What kind of line will you see at the gas station? What trend will we expect to see in price and quantity? b. If the current price is $6.00/ gallon, will there be a shortage or surplus, or an equilibrium in the gasoline market? How many gallons are traded in the market? What kind of line will you see at the gas station? What trend will we expect to see in price and quantity? c. If the current price is $4.00] gallon, will there be a shortage or surplus, or an equilibrium in the gasoline market? How many gallons are traded in the market? What kind of line will you see at the gas station? What trend will we expect to see in price and quantity? d. When vacation time comes around, the quantity demanded at any price increases by 200 gallons. Draw a new graph, showing the supply curve, and both the old and new demand curves. Show how the equilibrium price and quantity have changed. You do not have to figure out exactly what the new equilibrium is, merely show in what direction they have changed. Do these changes make intuitive sense, given the change in peoples' desire for gasoline? Use the same gasoline market example from homeworks 2 and 3 (Le. the original supply and demand from homework 2. Now let there be a $2.00 tax on gas, imposed on the demanders. Draw the old and new (after tax) demand curves on a diagram. Remember that the new one is just the old one dropped down by one dollar, but remember that this is the demand curve as seen by suppliers. The actual demand curve is still the same. 1. Calculate: a. quantity before the tax b. quantity after the tax c. price before the tax cl. demanders price after the tax e. suppliers price after the tax. 2. Label on the diagram, and calculate: a. Producer surplus before the tax b. Producer surplus after the tax c. Consumer surplus before the tax d. Consumer surplus after the tax e. Government revenue from the tax f. Consumer deadweight loss from the tax g. Producer deadweight loss from the tax