Question:

1. Explain how a 10ent per gallon subsidy to gasoline sellers will ultimately reduce the price of gasoline to consumers by l0 cents per gallon, if gasoline is sold in pen'ectly competitive markets and the gasoline Industry is one of constant costs. 2. Explain why a tax of 10 cents per pack collected from bubble gum sellers Wlll result in a smaller monthly decrease in quantity sold when the bubble gum industry is a monopoly, rather than if it were competitive