1. The nation of Fishkasar has a tax rate of 5% on the first 20,000 wallops (the national currency) of taxable income, then 20% on the next 30,000 wallops, then 50% on all taxable income above 50,000 wallops. Fishkasar provides a 5,000-walop exemption per family member. (20 points) a. Jamil's family has three members and earns 60,000 wallops per year. Calculate the family's marginal and average tax rates. (10 points) b. Suppose that Fishkasar changed its tax code to a flat tax of 30% with an 10,000-walop per family member exemption. Would this change in the tax system make the system more progressive, more regressive, or neither? (10 points) 2. Explain graphically the Ricardian Equivalence Theorem. (20 points) 3. What is the externality? Give an example for negative and positive externalities. (20 points) 4. Suppose 10 people each have the demand Q=20 - 4P for streetlights and 5 people have the demand Q=18 - 2P for streetlights. The cost of building each streetlight is 3. If it is impossible to purchase a fractional number of streetlights, how many streetlights are socially optimal? (20 points) 5. An individual's demand for physician office visits per year is Q = 10 - (1/20) P, where is the price of an Office visit. The marginal cost of producing an Office visit is $120. (20 points) a. If individuals pay full price for obtaining medical services, how many Office visits will they make per year? (10points) b. If individuals must pay only a $20 copayment for each Office visit, how many Office visits will they make per year? (5 points) c. What is the deadweight loss to society associated with not charging individuals for the full cost of their health care? (5 points)