Question: The demand for insulin is completely inelastic. The supply ice cubes is completely elastic. Suppose that the government puts a $1 per unit tax on producers of insulin and consumers of ice cubes.

a. In two separate pictures, show the free market price and quantity, and the consumer, producer, and nominal price, and the quantity after the tax in imposed in each market.

b. Now do the welfare analysis of these taxes. Show the consumer surplus, producer surplus, tax revenue, and total social surplus both before and after the tax in each in these two markets. (Thus, you should have four columns of answers: Before the tax in the insulin market, after the tax in the insulin market, before the tax in the ice cube market, and after the tax in the ice cube market)

c. Which policy, the ice cube tax or the insulin tax, is better from the standpoint of minimizing dead weight loss?