10. Consider the market for aglets (e.g. tips of shoelaces): Demand : p =12 - -Q" + 3Y Supply : p 4 3 Q# + where p is the market price, Q"(Q*) is the quantity demanded (supplied), w is the wage rate of aglets manufacture workers, and Y the consumer disposable per capita income. |8 points each (a) Find the equilibrium market size and price as function of the wage rate w and consumer disposable per capita income Y. (b) Construct a graph that represents this linear demand/supply model. Make sure that everything is labeled, including equilibrium objects. (c) Suppose that a unit tax of 7 is placed on suppliers. Find the post-tax size of the market Q"(7) and the price that consumers pay at this market size, e.g. p*(). Your answer should still be in terms of w and Y. (d) Find the consumer share of the tax, that is find P . Likewise, find the producer share of the tax 1 - 2 . What does your answer tell you about the relative price sensitivity difference between consumers and producers? (e) Government tax revenue is defined as the product of the tax rate and the post-tax market size, that is: G(T) = 7 x Q*(7). Our post-tax market size is a function of income Y. How does the size of government revenue change with respect to changes in the size of the consumer income? In other words, find 89. For a 4 point penalty, you can answer the question without math (e.g. raising the wage rate increases/decreases/has no affect on the size of government revenue because ...)