The diagram below shows a person's budget constraint and her optimal consumption of apples and oranges.
(a) Use the diagram below to derive the uncompensated and the compensated demand curve for oranges (the good on the vertical axis)
(b) Briefly explain why we need the compensated demand curve (instead of the uncompensated demand curve) to measure excess burden.
(c) Assume that the supply curve of oranges is a horizontal curve at $1 (the marginal cost of producing 1 orange), that the equilibrium quantity of oranges traded is 10,000, and that an increase in the price of oranges by 1% lowers the quantity of demand by 0.5%. Calculate the excess burden of a tax on oranges of
(i) $0.10.
(ii) $0.20.
(iii)$0.30.