2. Suppose that the government imposes a subsidy of $1 per pound of fish and gives the subsidy to fish producers. Draw a supply-demand diagram to illustrate the market effects of the subsidy. (4 points)

3. "The poor are the ones who suffer from high gas and electricity bills. We should pass a law that gas and electricity rates cannot increase by more than 1 percent annually." Evaluate this statement in terms of supply and demand analysis, assuming that equilibrium prices rise faster than 1 percent annually. (2 points)

4. "Consumer understandably like lower prices, but they should understand there is a great difference between a lower price produced by a government price ceiling and a lower price that comes about through normal market channels; one benefits the consumer, the other may not." Use an analysis of rent control to evaluate this statement. (2 points)