5. The market has the following demand and supply curves:

Demand: Q_D(p) = 1,200 - 8 p

Supply: Q_S(p) = 2 p - 40

1. Draw the supply and demand curves, with tax free equilibrium price and quantity solved.

Solve both consumer surplus and producer surplus.

1. Tax = $15 per unit. Solve price paid by consumer and price received by seller. Solve total tax revenue, excess burden of taxation, consumer surplus and producer surplus.
2. Tax = $45 per unit. Solve price paid by consumer and price received by seller. Solve total tax revenue.
3. Draw the Laffer curve, with the numbers solved from parts A, B and C.