P3 Here is a market clearing figure: Quantity 1.In market-clearing equilibrium, what is the total social benefit to the consumers? Group of answer choices A+B+C+E A+B+C A A+B 2.In market-clearing equilibrium, what is the total social cost to the producers? Group of answer choices C+E A+B E+A B+C 3.In market-clearing equilibrium, what is the social net benefit of the market? Group of answer choices E+A B+C A+B C+E 4.In market-clearing equilibrium, what is the market consumer surplus? Group of answer choices B AC E 5.ln market-clearing equilibrium, what is the market producer surplus? Group of answer choices C E A B 6.ln market-clearing equilibrium, what is the total social surplus? Gr0up of answer choices E+A A+B C+E B+C Review from the notes: The next set of questions are going to have you calculate market equilibrium and then calculate the areas just as you have in previous exercises. To get all of them correct, it is important that you start correctly by finding the correct market equilibrium quantity and price. If the Qd=50-4P and Qs=-4+2P then setting them equal and solving for the market clearing price would be P\"=9. I can verify this is correct by plugging 9 into both the Qdequation and Qs equation and they will have the same answer. E.g., Qg=50-4*9=14 and Qs=-4+2*9=14; so, Q*=14 For the remaining Questions: Suppose the demand Curve in the diagram was given by the equation Qd,=1OD-2P, whereas the supply curve as given by Qs= -10+O.5 P. 7.Solve for the market clearing price, P\". Hint: You should find an answer somewhere between $40 and $50. 8.Solve for the market clearing quantity, Q*. Hint: You should find a quantity between 10 and 20 units. 9.Report total consumer benefits in market equilibrium (L42. sum of marginal benefits to consumers for all units from O to Q*}. 10.Report total consumer surplus in market equilibrium. 11.Report total production costs in market equilibrium (Lg sum of producers' marginal costs for all units from O to Q*}. 12.Tota| production surplus in market equilibrium. You can now use previous answers to calculate these additional market equilibrium welfare statistics: 13.Social net benefit (Q9 minus Q11) 14.Tota| social surplus. (Q10+Q12} Let's start over with new supply and demand curve parameters, and let's also make the demand curve slightly more elaborate by adding income as a demand curve shifter: ga= 400 SF on Q5 = 10 + 2.5P Where l E; average income measured in thousands of dollars. Adding income as a demand curve shifter here basically just changed the intercept. Plug any number into land it will just get combined with the intercept and you proceed just the same as before. 15.If i=30, find the marketclearing price. 16.|f l=60, find the market-clearing price. (Study Note: This is basically a negative demand shock from the previous question, what do you predict will happen?) 17.|s the good supplied in this market a normal or inferior good? a. Inferior b. Normal Suppose the market demand curve for a product is given by 9.9]; 400 SP and the market supply curve is Qs = SF. The market clearing price and quantity is P*=50 and Q*=150, which results in $2,250 of consumer surplus and $3,750 of producer surplus for a total social surplus of $6,000. You can verify all this using your E, CS, and PS functions you've already used. Suppose a $4 per unit tax is imposed on consumers. You should be able to see that this will result in a new intercept in the demand curve. Solving this against the supply curve will yield a lower market equilibrium quantity. Also, at that new quantity, there will be a $4 difference between price consumers pay and the price suppliers receive. Answer the following questions about the tax scenario. 18.What price will producers receive? 19.What will be the effective price paid by conSumers (producer's price received + tax)?l 20.What will be the new market production level after the tax? Suppose instead of a $4 tax on consumers we do a $4 per unit tax is imposed on producers. Answer the following. 21.What price will consumers pay? 22.What will be the effective price received by producers (consumer's price - tax)? 23.What will be the new market production level after the tax? You should notice that 21 through 23 replicated the work in 18 through 20, so it didn't actually matter which side of the market you taxed, the effect on consumer and producer prices as well as market production was the same. 24.Use the consumer's price (found in 19 and 21) to calculate new consumer surplus using your CS function. 25.Use the producer's price (found in 18 and 22) to calculate new producer surplus using your PS function. 26.Calculate tax revenue as $4 times market production (found in 20 and 23). 27.Calculate the new social surplus, which is the new CS, new PS, and tax revenue combined. 28.Calculate the deadweight loss of the tax, which is old social surplus ($6,000) minus the new social surplus found in 27