Response to the Gas Tax. Petrov initially pays $2,200 in income taxes and consumes 600 gallons of gasoline per year at a price of $3 per gallon. The price of the other good is $1. For Petrov’s initial...

Response to the Gas Tax. Petrov initially pays $2,200 in income taxes and consumes 600 gallons of gasoline per year at a price of $3 per gallon. The price of the other good is $1. For Petrov’s initial product bundle, the marginal utility of gas is 30 utils and the marginal utility of the other good is 10 utils. (Related to Application 2 on page 497.)

a. For his initial bundle, the marginal utility per dollar on gasoline is
 utils.

b. Suppose the government imposes a new gasoline tax that increases the price of gas to $5. To make his initial consumer bundle just affordable, Petrov’s income must
(increase/decrease) by

 .

c. Suppose the government cuts Petrov’s income tax by the amount computed in (b). Given the new gas tax and the income tax cut, at his initial bundle, the marginal utility per dollar of gasoline is utils, compared to
 for the other good. To satisfy  the marginal principle, Petrov
 will (increase/decrease) his gasoline consumption.