onsider an individual with a utility function (1 , 2 ) = 1 2 . Their income is Y = $100. The pre-tax market prices they face are p1 = $5 and p2 = $1. Suppose a unit tax of $0.25 is introduced on good 1, that the statutory incidence of the tax is on firms, that firms are perfectly competitive and that firms are perfectly elastic in their supply of both goods. a. Derive the uncompensated demand functions for x 1 and x 2 . b. What is the compensated own-price elasticity of demand for good 1? c. Calculate consumer surplus before and after the tax is introduced. d. Calculate the revenue generated by the tax. e. Calculate the excess burden (EB) from this tax