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Problems to be discussed in live session: chapter 3 1. Here are the data for the gasoline market in the U.5.: Price of gasoline: $2 per gallon Production and consumption: 100 billion gallons per year Price elasticity of supply: DA Price elasticity of demand: I.'i.5 a. Derive the linear supply and demand curve for gasoline. h. Suppose the governMent imposes a tax of $1 per gallon, what will the new ecluilihrium quantity be? What price will the buyer pay? What amount per gallon will the seller receive? What will be the government reyenue? How much is the deadweight loss? c. Suppose the government grants a subsidy of $1 per gallon, what will the new equilibrium quantity be? What price will the buyer pay? What amount per gallon will the seller receive? What will be the cost of the government? How much is the deadweight loss