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The government of a country imports gasoline at a price of $2.50 per gallon and makes it available to its citizens at a price of
The government of a country imports gasoline at a price of $2.50 per gallon and makes it available to its citizens at a price of $1 per gallon. The demand curve for gasoline in the country is given by: = 8 , where is the price per gallon in dollars and is the quantity in millions of gallons per year. a. Draw the demand curve for gasoline in the country. b. How much must the government pay to import enough gasoline to be sold at $1 per gallon? c. Calculate the change in consumer surplus as a result of the price subsidy and show the change in the graph you drew for part a
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