Hi! I really need help with this old exam question. Thank you!

Demand for carbonated soft drinks in Chile is given by p=11-Q and supply by p=1+Q.

a)What are equilibrium prices and quantities in this case? Calculate consumer surplus and producer surplus.

b)Chile has drastically increased the tax per liter. Assume that there is a per liter tax of t=2. What price do producers get? What is the price that consumers pay? How high is tax revenue?

c)Calculate consumer surplus, producer surplus and deadweight loss for the case in b).

Many countries have had rationing systems in times of crisis. Vera and Winston live in Britain during WW II. Every week they receive 20 potatoes and 20 grams of tea per person.

a)Use an Edgeworth box to illustrate Vera and Winstons's endowments.

b)Assume that Vera and Winston have identical preferences that have the usual convex shape (such that utility for instance is given by U= T^1/2*C^1/2.) Draw indifference curves that represent the situation. Will they trade in this case?

c)Now instead assume that Vera receives 10 potatoes and 30 grams of tea while Winston receives 30 potatoes and 10 grams of tea. Will they trade in this case? Show the region in which there are gains from trade.

d)Now assume that initial endowments are symmetric as in the original question (20 of each to both of them). Vera's preferences are as in b) but Winston does not want to drink tea anymore and receives no utility from tea drinking. Illustrate the region in which there are gains from trade in this case.

e)In many cases people are banned from trading their individual quotas when there is rationing. Can you see any economic arguments for why such trading should be banned?