Australian government legislation defines fuel containing more than (1 %) ethanol as an ethanolblended fuel, but it

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Australian government legislation defines fuel containing more than \(1 \%\) ethanol as an ethanolblended fuel, but it limits the amount of ethanol in petrol to \(10 \%\). Suppose the demand curve for ethanol in fuel is \(Q_{d}=0.75-0.9 p\) and the supply curve is \(Q_{s}=0.1+0.3 p\), where \(p\) is the price in Australian dollars per liter and the quantities are in billions of liters. How would a governmentmandated cut in the amount of ethanol in petrol, reducing it to \(5 \%\), affect the price of ethanol?

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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