Question: 1. In 2002. the US federal government levied a lax of 3 percent on that pan of a car's pike exceed-ing 840.000. Ter example, the tax liability on a 650,000 car would be 003 x ($50,000 -S40,000), or $300.) Discuss the efficiency, equity, and administrability of this luxury car tax?
2. Diagram a market for a natural monopolist and label the excess burden that results if this fun produces the profit-maximizing output. Now show the excess burden that results if the firm is required by law to charge average cost.