These study questions are on economics and taxes.

a. Describe the concept of consumer and producer surplus. Briefly describe how it is used to evaluate a market.

b. Suppose the state government decided that bagel sellers are integral to the state economy and decided to set a price floor for bagels.

i. For the price floor to be effective what must be true?

ii. Describe the inefficiency of this policy if the price floor is effective.

c. What is the cost of a tax? Briefly explain (no graphs on this one).

d. Suppose a large storm hits Texas and water supplies are disrupted. Consider just the market for bottled water, what happens to the consumer and producer surplus in that market because of the storm? kindly provide answer with a graph