Demand and supply often shift in the retail market for gasoline. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in Maine. Some of the data is missing.

a. Use the following facts to fill in the missing data in the table. If demand is D₁ and supply is S₁ , the equilibrium quantity is 7000 gallons per month. When demand is D₂ and supply is S₁ , the equilibrium price is $3.00 per gallon. When demand is D₂ and supply is S₁ , there is an excess demand of 4000 gallons per month at a price of $1.00 per gallon. If demand is D₁ and supply is S₂ , the equilibrium quantity is 8000 gallons per month.

b. Compare two equilibriums. In the first, demand is D₁ and supply is S₁ . In the second, demand is D₁ and supply is S₂ . By how much does the equilibrium quantity change? By how much does the equilibrium price change?

c. If supply falls from S₂ to S₁ while demand declines from D₂ to D₁ , does the equilibrium price rise, fall, or stay the same? What if only supply falls? What if only demand falls?

d. Suppose that supply is fixed at S₁ and that demand starts at D₁ . By how many gallons per month would demand have to increase at each price level such that the equilibrium price per gallon would be $3.00? $4.00?

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Quantities Demanded Quantities Supplied D, Price Dz 9000 8000 9500 9000 8500 $4.00 7500 5000 6000 8000 8500 2.00 9000 5000