1. Assume a per-unit excise tax is levied on gasoline of $.85 per gallon. The market-clearing price before the tax is levied is $.95 per gallon and the quantity exchanged is 1500 gallons per hour. The consumer will pay $1.70 after the tax is levied and the quantity exchanged will drop to 1300 gallons per hour. What is the change in consumer surplus? (20 Marks)  

Answer rating: 100% (QA)

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