TECHNICAL QUESTIONS Question 1 [10 marks] The demand for "gasoline X10 for fueling cars in a small city is given by , while the supply is : Where P is price in dollars per litre ($/litre) and and are quantity demanded and quantity supplied in litres respectively. Given this information, answer the following questions. (a): What is the equilibrium price in $/litre) and quantity of gasoline X10 sold in this market? [2 marks] (b): What is the price elasticity of demand for gasoline X10 at the equilibrium price obtained in (a) above? Is demand elastic or inelastic at this price? [3 marks] (c): To support the low-income households, suppose the city government imposes a price ceiling of $3.5 per litre of gasoline X10. How many litres will be sold and how many litres will be demanded? Briefly explain the problem that will arise from this policy. A sketch would be helpful [2 marks] (d): Briefly discuss (with the help of sketches) what will happen to the equilibrium price and quantity in the gasoline X10 market in each of the following cases (assume there is no price ceiling) [3 marks] (i): A new car fuel product supermax gas becomes available to consumers. (ii): The price of electric cars decreases due to mass production (iii): New technology is discovered that is more efficient in refining crude oil into gasoline X10