Alternatively, assume that ChatGPT's market is competitive, and its market demand and market curves are linear (that is, they are straight lines). Suppose without government intervention, the equilibrium price and quantity are $8 and 2 unit hours (unit could be in thousands/millions) of usages of ChatGPT.

a. Scenario 1: Let a government body impose a fixed tax $2 on OpenAI (the producer of ChatGPT)

to discourage the usages of ChatGPT. As a result, the new equilibrium price is $9, and the new

equilibrium quantity is 1-unit hours (unit could be in thousands/millions) of usages of

ChatGPT. Find out both (i) seller's price (before and after tax), (ii) buyer's price (before and

after tax) and (iii) calculate the deadweight loss. (iv) Provide economic intuitions of your

results.

b. Scenario 2: Like before, a government body imposes a fixed tax $2 on OpenAI (the producer

of ChatGPT) to discourage the usages of ChatGPT. As a result, the new equilibrium price is $10

but the new equilibrium quantity is still 2-unit hours (unit could be in thousands/millions) of

usages of ChatGPT. Find out both (i) seller's price (after tax); (ii) buyer's price (after tax) and

(iii) calculate the deadweight loss. (iv) Provide economic intuitions of your results.

c. Given your answers (a) and (b), what conclusion do you draw? In case (b), who will suffer most

consumer or producer?