1. What percentage of a tax will the demander pay if price elasticity of supply is 2.0 and price elasticity of demand is 0.5? What percentage will the supplier pay? Show work to receive full credit.

2. Suppose a firm is currently producing 10 units. Its fixed costs are $100 and its variable costs are $40. At an output level of 10 units, what is the firm's?Show work to receive full credit.

• If the total cost of producing 11 units is $147, what is the marginal cost of the eleventh unit?
• The marginal cost for the 11^th unit is $7. Is average total cost rising or falling? How do you know?
• The marginal cost for the 11^th unit is $7. Is average variable cost rising or falling? How do you know?