wnvuv-u--u ..-..'--- v-\"rvv' ..... Assume for all questions that the economy is closed. . (a) Draw a linear demand function and a linear marginal cost function. Use this gure to iden- tify (graphically) consumer and producer incidence of a unit consumer tax, 1/, in a competitive equilibrium. (b) Now rotate the original supply function around the zero-tax equilibrium, making the supply function less elastic. Identify the consumer and producer tax incidence and compare these to your answer in part (a). (c) Explain the relation between your answer to part (b) and equation 10.4. (This question requires reproducing material in the textbook, no additional analysis. The point of the question is to encourage students to think carefully about the material.) . (a) Using the approximation of deadweight loss in equation 10.5, show that deadweight loss in- creases with either the elasticity of demand or the elasticity of supply. (Hint: take a derivative.) For this question, you are holding the tax and the zero-tax equilibrium quantity and price constant, and considering the effect of making either the demand or the supply function atter (more elastic) at this equilibrium. (b) Provide an economic explanation for the relation you showed in part (a)