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1. a. Yo-Yo production causes the release of toxic waste products into the atmosphere. The Congressional Yo-Yos removed the price floor, so output in the industry rose again. In response, they decide to impose a per yo-yo tax on all units sold in the industry. They want to set the tax so that output falls to its price floor level (Q= 80 ). What tax should be charged per yo-yo? (Hint: this one is easy if you see what is going on, already did the first tutorial, and understand our in-class tax analysis.) Explain. b. Should Congress tax producers or consumers in this case? Why? Explain. c. At that tax rate, what fraction of the tax is passed through to yo-yo buyers as a rise in price? What fraction is passed through to yo-yo producers as a fall in price? Calculate and explain. You should be able to illustrate what's going on by referring to your graph of the equilibriums before and after the tax. d. Calculate the elasticities of demand and supply at the original equilibrium before the tax is imposed. Use those and the formulas for the pass-thru fractions in the Lecture Notes to calculate the pass-thru fractions again. Verify that you get the same answer as you got in part c. e. Calculate CS, PS, and DWL with the tax. Also calculate any transfers or government revenue. How do your answers compare to what you answered in the tutorial on price controls

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