For thirty years, the U.S. government subsidized ethanol directly and indirectly with the goal of replacing 15% of U.S. gasoline use with this biofuel. The explicit ethanol subsidy was eliminated in 2012. (However, as of 2015, the government continued to subsidize corn, the main input, and required that gas stations sell a gasoline-ethanol mix, which greatly increases the demand for ethanol). In 2011, the last year of the ethanol subsidy, the subsidy cost the government $6 billion. A 2010 Rice University study reports that the government spent $4 billion in 2008 to replace about 2% of the U.S gasoline supply with ethanol, at a cost of about $1.95 per gallon on top of the gasoline retail price. The combined ethanol and corn subsidies amounted to about $2.59 per gallon of ethanol. According to a study (McPhail and Babcock, 2012), the supply elasticity of ethanol is about 0.13, and the demand elasticity is about -2.1. a. What was the incidence rate of the ethanol subsidy on purchasers of ethanol? b. Some free marketers argue that subsidies are inefficient. What was the deadweight loss, if any, associated with the ethanol subsidy? c. If the subsidy on ethanol were increased, how will it affect the incidence rate on purchasers relative to sellers of ethanol? How will it affect the deadweight loss? (Note: A subsidy is a negative tax through which the government gives people money instead of taking it from them).