An individual's demand curve for gasoline is given by P=10-Q, where P is the price of gasoline ($ per gallon) and Q is the quantity she consumes (hundreds of gallons per year). If the individual's annual income is $100,000 and the last year's price of gasoline was $3/gallon, by how much her consumer surplus declined if oil shortages raise the price to $4/gallon?
2. Using the graph shown, determine each of the following:
a. equilibrium price before the tax
b. consumer surplus before the tax
c. producer surplus before the tax
d. total surplus before the tax
e. consumer surplus after the tax
f. producer surplus after the tax
g. total tax revenue to the government
h. total surplus after the tax
i. deadweight loss
3. Using demand and supply diagrams, show the difference in deadweight loss between a market in which both demand and supply curves are inelastic and a market in which both demand and supply curves are elastic.
4. Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger? Briefly describe your answer.