(C) (d) (8) (f) Suppose that, as in P53 #3, the benet of revenue generated by taxes is B(R) = $1.25 X R. New, revenue can come from taxing both apples and bananas. Find the optimal tax rates (7'3, 73;.) using the optimality conditions DWL'A (TA) _ DWLfg (73) 334(7):) R'BU'B) BI(R(TA,TB)) 1 = Explain, in words, why optimal commodity tax rates must satisfy the above equations. Discuss how differences in the supply and demand curves for bananas (compared to applies) leads to the difference in optimal tax rates for the two goods. Now suppose banana eaters throw the banana peels on the ground, causing others to slip and fall. Neither producers nor consumers take this damage into account. As a result, the production of bananas generates a negative externality of $1 per unit. There are still no externalities associated with applies. How does your answer to part (g) change in the presence of this externality? Assume that the social benet from government revenue is still B(R) = 1.25 x R