A small nation produces and sells all the oil it wants at the world price of $70 per barrel. On the other hand, it sells some of its oil to its own citizens for the equivalent of $10 per barrel. For simplicity, assume the demand curve for oil in this nation is P D = $110 – Q. How much does selling at $10 per barrel add to the buyers’ consumer surplus

(over and above their consumer surplus at $70)? What is the foregone cost to the nation of selling this oil for $10 instead of selling it at the world price of $70? How much better would its citizens be if they paid $70 per barrel but got the foregone cost as a supplement to their income?