Consider a competitive market in which P = 100 2Q is the inverse demand for fuel and P = 10 + Q is the inverse supply of fuel. Calculations are preferred, but you may use a graph for partial credit.

(a) Without a tax, what is the market clearing price and output, P and Q?

(b) What is the consumer surplus and producer surplus (with no tax)?

(c) If a tax on fuel is set at $15, how much fuel will be purchased? You can assume that the buyers pay the tax (but it doesn't matter)

(d) What is the deadweight loss of the tax?