1. If the U.S. wants to maximize tax revenues, should we impose an excise tax on McDonalds or gasoline? Why? Make sure to include a graph and the equation for elasticity and your assumptions regarding the elasticity of demand for both products.

2. International Trade

1. What is the difference between an absolute and comparative advantage? Give an example.
2. What are two ways nations prohibit trade? (Make sure to include the appropriate graphs for both the U.S. and the foreign country) who benefits and who pays for this action?

3. What are the 4 types of market failure? Explain each and give an example of each.