Suppose that the world price of a gallon of gasoline is $2.00 dollars per barrel and the US can buy all the gas it wants at this price. Suppose also that the demand and supply schedules for gasoline...

1. Suppose that the world price of a gallon of gasoline is $2.00 dollars per barrel and the US can buy all the gas it wants at this price. Suppose also that the demand and supply schedules for gasoline in the US are as follows:

Price ($ per gallon)        US Quantity demanded     US quantity supplied

$1.00                                   65                                       35

$1.50                                   60                                      40

$2.00                                   55                                      45

$2.50                                  50                                       50

$3.00                                  45                                       55

1. Suppose the US imposes a $.50 tax per gallon on imported gas. What quantity would Americans buy? How much of this would be supplied by American producers? How much would be imported?


2. Who is helped and who is hurt among the following groups: domestic consumers, domestic gasoline producers, the US government, foreign producers.