(1) Suppose demand is given by PD = 20 −

(1) Suppose demand is given by PD = 20 − .03QD and supply is given by PS = 6 + .04QS.

(a) What is the equilibrium quantity?

(b) What is the equilibrium price?

(c) What is the consumer surplus?

(d) What is the producer surplus?

(2) Now suppose the government imposes a $3.5 tax on suppliers.

(a) What will be the equilibrium quantity?

(b) What price will consumers pay?

(c) What price will producers receive?

(d) How much revenue will the government collect from the tax?

(e) What is the total welfare?

(f) What is the deadweight loss?

(3) Which equilibrium is more efficient?