1 Pass-through rates Consider a market for a good with constant marginal production cost (3 = $20 in which the government is considering imposing an excise tax on the producer of t = $10 per unit sold (i.e., for every unit the producer sells, he must make a remittance of $10 to the government). 1. Calculate the protmaximizing price before and after the tax is imposed for a monop olist facing the following demand curves: (a) D(p) = max{100 p, 0}. (b) D(p) = 10000/p2. (C) Db?) = exp(10 - 10/10). 2. The pass-through rate is the percentage of a change in input cost which is passed on to consumers via a price change. (So for instance, if costs increase by $10 and the price for consumers increases by $20, the pass-through rate is 200%, while if the price increases by $5 the pass-through rate is 50%.) Calculate the passthrough rate for the tax increase in a competitive market and for a monopolist under each of the demand functions given above. 3. Using these results, assess the claim that \"large rms with signicant market power will absorb a minimum wage increase, while small rms in a competitive market will pass it onto consumers\