Consider the market for micro-beer. Suppose that supply in this market is given by Qs = p/3, and the demand by Qd = 100 p, where p is the price. The government is worried about the consumption of alcohol. In particular, it wants to reduce micro-beer consumption and raise some money to treat alcoholism. One possibility would be to tax micro-beer, but there is a debate about what is the best way to. You are asked to give your advice before the government takes a decision. There are three proposals: (A) Impose a tax on consumption, of 10 per unit. (B) Impose a 10 per unit tax on the production. (C) Impose both a 5 per unit tax on consumption and a 5 per unit tax on production.

1. As a first step, calculate the equilibrium price and the quantity consumed in the market with no government intervention.
2. Calculate the equilibrium price and the quantity consumed in the market under proposal A. How much money does the government raise with this proposal?
3. Calculate the equilibrium price and the quantity consumed in the market under proposal B. How much money does the government raise with this proposal?
4. Calculate the equilibrium price and the quantity consumed in the market under proposal C. How much money does the government raise with this proposal?
5. Which proposal would you recommend to the government?