Suppose the demand function for apple is Qa = 35 - 1.75P and supply function Qs = 8 + 1.25P. a) Compute the price elasticity of demand for and supply of apple. Round your answer 0.5 to two (2) decimal points. b) If price is arbitrarily set at $11, compute (mathematically) industry's fictional net 0.5 gain or loss resulting from this price floor. Show your work graphically as well. Christin has a monthly income of $500 that he allocates between two goods: food and clothing. Suppose food costs $8 per pound and clothing cost $5 per piece. a) Draw her budget constraint properly labelling the axes. 0.5 b) Suppose also that her utility function is given by U(F, C) = 2F2 + C2. What 0.5 combination of food and clothing does she buy in order to maximize her utility? Show your work mathematically. Round your answer to two (2) decimal points. The market for widgets can be described by the following equations: Demand: P = 10 - Q Supply: P = Q -4 Equilibrium price is $3 and equilibrium quantity is 7. a) Suppose that government imposes a tax of $1 per unit to reduce widget consumption. 0.5 What will the new equilibrium price and quantity be? b) What price will the buyer pay? What price will the seller receive? 0.5 The benefits and costs of sulfur dioxide emissions are given by: Benefit of reducing emission: MB = 500 - 20A Costs of reducing emissions: MC = 200 + 5A where A is the quantity of emision reduced in millions of tons and the benefits and costs are given in dollars per ton. a. What is the socially efficient level of emissions abatement (reduction)? 0.5 b. What are the marginal benefits and marginal cost of abatement at the socially 0.5 efficient level of abatement