1. Consider the market for yo-yos (sometimes called "Yo Yo Ma"). The supply curve is given by P = 10 + 0.05Q. The demand curve is given by P = 25 -0.1Q. a. Are these inverse, or perverse, supply and demand curves? Why? How do you tell? b. Plot them and label the intercepts (on both axes, in the case of the demand curve) and the slopes of each. C. Calculate the market equilibrium with no government regulation (P, Q, CS, PS). 2. The Congressional yo-yo committee ("Congressional Yo-Yos") decides that yo- yo prices move up and down with too much volatility. It therefore drafts a regulation that would impose a price ceiling of $17 per yo-yo. a. At the current market equilibrium, does this regulation make sense? Why or why not? Explain. b. Are yo-yo makers likely to lobby Congress in favor of this law or against? Explain. 3. After stringing along the yo-yo industry with this proposed regulation for a while, Congress reverses itself and decides to impose a price floor of $17. a. Calculate the new industry output that results. Also calculate the shortage (excess demand) or surplus (excess supply) that results. Show your work graphically to illustrate your ideas. b. Calculate the new CS and PS that results from the regulation. C. Calculate any "transfer" between producers and consumers that is caused by the regulation. Which transfers to the other? d. Calculate any DWL caused by the regulation