I would like to have an idea of what and how to do in this question. Thank you.

Consider the perfectly competitive market for fossil fuels (in MMBTUs) facing the European Union. Price taking fossil fuel consumers outside of the European Union (Rest of World or ROW) have a demand function given by: P = mooEa. Price taking fossil fuel consumers within the Eur0pean Union have a demand function given by: P = 2100 i) Q. 125 Price taking fossil fuel Suppliers have a supply function given by: P = (100 10003;) + 3/19 For the sake of calculating welfare below, assume that the EU and ROW equally split total producer surplus. Suppose that there are no external damages from fossil fuel production or consumption. Suppose the European Union is considering an excise tax on its own fossil fuel consumers of $25/MMBTU. This is equivalent to the excise tax driving a wedge between its own demand for fossil fuels and the net supply curve facing the EU (net supply = supply demand from ROW). a. For 2: between 0.01 and 0.99 (increments of 0.01) and y = i: i. Calculate the change in E U welfare clue to the tax. Calculate the change in ROW welfare due to the tax. Plot the change in EU welfare on the left y-axis and the change in ROWwelfare 0n the right y-axis against 3: on the xaxis. Explain the resulting gures. ii. Calculate the deadweight loss due to the tax (change in global welfare due to ROW tax). Calculate the leakage ratio, LR = %. Plot the deadweight loss on the D left y-axis and the leakage ratio on the right y-axis againstx on the x-axis. Explain the resulting gures