1. Assuming linear supply and demand, how does the deadweight loss from a tax change in proportion to the size of that tax? Explain the relationship between the two quantities.
2. In part as an effort to discourage smoking, Australia has some of the highest levels of cigarette taxation in the world. To what extent does a tax on cigarettes reduce the number of people smoking? Is taxing cigarettes an effective way to raise revenue for the government from smokers? Justify your answers.
3. Rent controls create shortages in housing markets; however, the magnitude of these shortages differs between the long run and short run. What explains these differences?

Jack and Catherine have a cooperative project that must be completed for a business assignment. The project involves performing a series of calculations and writing a report. It would take Jack 10 hours to complete the required calculations and 10 hours to write the report. It would take Catherine 12 hours to complete the calculations and 20 hours to write the report.

1. How much time would it take the two to complete the project if they divide the calculations equally and the writing equally?
2. How much time would it take the two to complete the project if they use comparative advantage and specialise in calculating or writing?
3. If Catherine and Jack have the same opportunity cost of $5 per hour, is there a better solution than for each to specialise in calculating or writing?