Question: 1. Graphically illustrate a per unit tax imposed on the seller of a product. Identify the welfare loss and the portion of the tax paid by the buyer and the seller.
2. Beginning in a state of equilibrium in our consumer equilibrium model (food is situated on the Y-axis and beverage on the X-axis). Graphically illustrate the income and substitution effect from a fall in the price of beverage (ceteris paribus) when beverage is a normal good. Label clearly.