Problem
The government of lslandia, a small island nation, imports heating oil at a price of $2 per gallon and makes it available to its citizens at $1 per gallon. The market demand curve for heating oil in lslandia is given by P = 6 - Q, where P is the price per gallon in dollars, and Q is the quantity in millions of gallons per year. What is the post subsidy equilibrium quantity?