Question: 2. Industry analysts have long recognized the highly complementary relationship between used automobiles and gasoline. The following supply and demand functions represent both goods:

automobiles and gasoline. The following supply and demand functions represent both goods:

2. Industry analysts have long recognized the highly complementary relationship between used automobiles and gasoline. The following supply and demand functions represent both goods: QDA 82-3PA-1PG = QSA = -5 + 15PA QDG 92-2PA - 4PG = QSG= -6 + 32PG where QDA and QSA refer to quantities of used automobiles demanded and supplied each month, QDG and QSG refer to quantities of gasoline demanded and supplied each month measured in gallons, PG is the price of gasoline per gallon, and PA is the price per automobile. a. Calculate the equilibrium price and quantity that will prevail in both the automobile and gasoline markets. b. Assume that a recession causes the demand curve for gasoline to shift leftward as follows: QDG = 80-4PG - 2.5PA. Calculate the initial impact of this change in demand on the gasoline and tire markets.

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