Calculate 2 firms individual and total demands and supplies, consumer welfare, profits, government revenue/spending before and after the policy is implemented.

Suppose there are two types of the consumers: 11,1 (1:, y) = $0.25 310-75 and U2 (:13, z) = 2:1,- + z ,where x is the consumption good and y and z are different natural resources. Five consumers of type 1 own 10 units of resource y each and 5 other consumers of type 1 own 10 units of resource 2. There are also two consumers of type two, each of them owning one of the rms. There are two competitive rms in the economy. Firm 1 produces capital from the resource y with technology K = . Firm 2 produces the consumption good from capital and resource 2 with technology :1: = K;- 21%