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Question: dises increases from 8 to 10 if your income is...

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dises increases from $8 to $10 if your income is $12,000 b Caleulate your income elasticity of demand as your income increases from S1 the price is $16 (2) (30 points) Suppose that the demand supply for rice is as follows: The equilibrium price is P and the equilibrium quantity is QF in free market. (1) What area can represent the consumer surplus and producer surplus? (2) If government want to control the ric e price level at Po what area can represent the consumer surplus and producer surplus in this case? (3) What kind of policies can fulfill this target? Give some specific example. What is the governments surplus in this case. Draw another graph and color this area. 3 Graph (20 points) . Use Demand and supply diagram and draw graphs to explain why the burden of a tax falls more heavily on the side of the market that is less elastic.

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