The market demand and supply functions for VCR movie rentals are: QD=10-0.04P and QS=3.8P+4. Suppose that VCR movie rentals are taxed at $0.25 per unit. Calculate: i. the equilibrium quantity and price, point elasticity of demand in equilibrium and producer surplus without tax. ii. the revenues generated by the tax, the loss in producer surplus and percentage of the burden of the tax falls on producers? b. Determine the "rule-of-thumb" price when the monopolist has a marginal cost of $25 and the price elasticity of demand of -3.0.

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