Given the concern about environmental damage for car pollution, many leaders propose increasing the tax on gasoline. Suppose that currently a consumer has $50,000 in annual income and a gallon of gasoline has a price of $2.50 per gallon. Also, assume that consumers have quasilinear preferences over gasoline. You can consider dollars spent on all other goods to be a normal good. Required: a. Illustrate the consumer’s budget constraint with "gallons of gasoline per year" on the x-axis and "dollars spent on all other goods on the y-axis. Make sure to label the intercepts and calculate the slope of the line. b. Say the government implements a gasoline tax of $1.50 per gallon on the consumer (yes, this is a large tax). Illustrate the consumer’s budget line now on a different graph. Assume that the consumer chooses to use 5000 gallons of gasoline per year when optimizing (yes, this is a lot of gasoline). Draw an indifference curve through that point. What will the consumer spend on all other goods and what will the consumer pay in gasoline taxes? c. Worried about the hardship created by this policy, the government gives a rebate (cash) back to the consumer that is exactly equal to the amount collected in gasoline taxes. Illustrate this tax and rebate plan budget constraint (label slope and intercepts) on a new graph. How much gasoline is consumed and how much is spent on consumption of all other goods? d. Can you tell if the consumer is happier under the tax/rebate plan or no plan at all? Can you tell under which regime (tax/rebate vs no plan) the consumer will consume more gasoline? Explain and illustrate.