Question: Please help I am so lost 1. Suppose that the State of Ohio would like to decrease air pollution. Their solution to the pollution problem

Please help I am so lost

Please help I am so lost 1. Suppose that the State of

1. Suppose that the State of Ohio would like to decrease air pollution. Their solution to the pollution problem is to increase the cost of gasoline by $5 per gallon at every gas station in Ohio. a. Construct a diagram that shows an individual's optimal consumption choice between gasoline and "other goods" both before and after the price increase. Keep in mind that the demand for gasoline is inelastic. b. Display graphically, the income change necessary to keep the consumer at their original level of utility. c. Display this area graphically using a hicksian demand curve. d. Suppose the consumer's utility function is given by U = q1/2q2/2 with a budget of $200. At the original indifference curve, they achieve U = 100 at the optimal bundle of q1 = 100, q2=100. Find the price of gasoline (good one) and the price of other goods (good two) before the price increase of gasoline. e. Find the change in income necessary to move this consumer back to U = 100 after gasoline prices are raised by $5 per gallon

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