Consider the perfectly competitive market for shoelaces.Suppose there are no externalities or other form of market failure in this market.The inverse supply function is P = (1/3)QS and the inverse demand function is P = 9 - 1/6QD.(P is in $ per pair and Q is in millions of pairs per year.)

a.Graph supply and demand in this market.Label each curve, each axis, and all intercepts.

b.Solve for the market equilibrium price and quantity.Label these on graph.

c.Calculate consumer surplus and producer surplus at the equilibrium quantity, stating your answer in the appropriate units.Label the areas corresponding to consumer surplus and producer surplus on your graph.

d.Calculate total surplus in the market at the equilibrium quantity.(in the appropriate units.)

e.

i.State a quantity at which there would be deadweight loss.

ii.What is the marginal cost at this quantity?What is the marginal benefit at this quantity?

iii.Calculate the amount of deadweight loss that would result if this quantity were produced in the market.Calculate the amount of total surplus that would result.(State your answer in the appropriate units.)

iv.Is the deadweight loss due to missed opportunities to generate positive economic surplus or is it due to negative economic surplus that is generated in the market?