1. Suppose the demand function is QD = 25 - 0.5P, and the supply curve is QS = -3 + 0.5P. a. Solve for the equilibrium price and quantity. b. Say a tax of $2 was placed on the sellers. Solve for the price buyers pay, the price sellers receive, and the quantity sold in the market after the tax. Show your work and results graphically. c. Suppose a tax of $2 was placed on the buyers. Solve for the price buyers pay, the price sellers receive, and the quantity sold in the market after the tax. Show your work and results graphically. d. Find the deadweight loss, consumer surplus, producer surplus, consumer surplus, and tax revenue after the implementation of the $2 tax. Make sure to show your work. 2. Given the demand curve, QD = 25 - 0.5P. a. Find the elasticity of demand if the price decrease from $44 to $40 using the arch elasticity formula. Is the elasticity inelastic or inelastic? b. Find the elasticity of demand if the price decrease from $16 to $12 using the arch elasticity formula. Is the elasticity inelastic or inelastic? c. Provide an intuition as to why you found a different elasticity between the price decrease from $44 to $40 compared to the price decrease from $16 to $12 along the demand curve. 3. Using your understanding of supply and demand shifts, under what conditions can we predict the change in equilibrium quantity but not the change in price firms sell in a market when both the demand curve and supply curve simultaneously shift? 4. An individual's preferences over consumption bundles A, B, and C are given as A B, B C, A C. Are these preferences transitive? Explain why or why not and provide the correct relationship. 5. Explain why indifference curves cannot cross using your understanding of transitivity and monotonicity. Give a graphical example to support your answer. 6. If the price elasticity of demand for hot dogs is - 2 and its price rose by 10%. By how much would the quantity demanded decrease? 7. If Skyla's budget line has intercepts 50 on the x-axis and 100 on the y-axis and Px = $10, what is Skyla's income? What is Py? what is the slope of the budget line? 8. Suppose an individual has a choice between wings and beers. Show an indifference curve for an individual who highly prefers wings. 9. Draw an indifference curve for an individual showing that MRS is increasing for both X and Y. 10. What assumptions doe the indifference curve violates when it is upward sloping? What type of good does an upward-sloping indifference curve represent? 11. It is estimated that the demand elasticity is -0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are -.068 and 0.73 for cotton and -0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, which of these goods would the consumer pay more of the tax burden?