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Question: imagine that a senator is trying to decide between placing...

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D) What incentive did the AFKM have to lobby for entry barriers (regulations)? 2. Imagine that a senator is trying to decide between placing a specific (per unit) tax on the consumption of either electricity (which has a very inelastic demand) or furniture (which has a very elastic demand) a) Assuming that the tax will be paid by consumers, draw two graphs (one for each good) showing the short-run impact of a specific tax on total societal surplus (i.e. the sum of producer surplus, consumer surplus, and tax revenue) b) the senators goal is to maximize efficiency, given your analysis in part a), which good should be taxed? Page 2 2 of

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