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please work this out Question 1. In the following graph, panel A shows a typical consumer's demand curve for gasoline in the city of Riverview

please work this out

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Question 1. In the following graph, panel A shows a typical consumer's demand curve for gasoline in the city of Riverview in the year of 2020 (Do) and 2021 (D,). In the year 2020, the relationship between gas price and quantity demanded for gas can be reflected on demand curve Do. Now suppose, in 2021, average income of Riverview has noticeably increased. Thus, demand for gasoline shifts from Do to Di. Panel A Panel B 10:00 10.00 9.00 9.00 8.00 8.00 7400 7.00 6.00 6:00 Price per gallon ($ 5.00 5.00 Price per gallon (S 4.00 4:00 3,00 3.00 2:00 2.00 1:00 1.00 15 20 24 26 Gallons per week Gallons per week (1) In 2020, when gas price goes down from $5 per gallon to $3 per gallon, how much quantity demanded for gas changes in Riverview? By such a change (price moves down from $5 to $3), how much is demand elasticity when gas price equals $5 per gallon in 2020? Tip: Here you need to estimate point elasticity when price of gas equals $5 per gallon. (2) In this case, the value of demand elasticity should be positive or negative? Why? How to interpret the elasticity you derived from above. (3) Similarly, what is the demand elasticity at $5 (gas price) in 2021 when gas price moves down from $5/gallon to $3/gallon? (4) Panel B illustrates the city imposed a quota of gas supply due to environmental concerns. For example, in 2020, each resident in Riverview has a quota 20 gallons of gasoline per week. This policy is illustrated as a vertical supply curve S1- In 2021, the city is planning to reduce the quota to 15 gallons per week, as the new supply curve S2 shows. Now the city wants to know how gas demand is responsive to price change after the new quota is implemented in 2021. To do so, as an economist, you are asked to measure arc demand elasticity when gas price rises from $1 per gallon to $3 per gallon on demand curve D, in 2021. How much is the arc elasticity? Tip: Here you need to estimate arc elasticity when price moves from $1 to $3

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