Use the data from the Energy Information Administration on weekly gasoline quantity and price and short-run and long-run price elasticities from economics.about.com. Using a linear approximation of the demand curve:

  1. Estimate the daily consumer surplus
  2. Estimate the daily consumer surplus change from a $1 increase in gas price (caused by a higher tax).
  3. What is the percentage change in the consumer surplus?
  4. If the true demand is semi-log or double-log, are the CS estimates biased upwards or downwards?
  5. If there are 1.2 million households in the US, what is the CS loss per household?