please see the attached.

3. [15 marks] The use of gasoline in the city decreases air quality. This small negative externality reduces the utility of all consumers. The total aggregate utility loss from this externality equals $1 per unit of gasoline consumed. The gasoline market is operated by competitive rms with cost function C (q) = (1'2. The daily demand for gasoline is D(p) = 110I 10p. (a) Find the competitive equilibrium of the gasoline market. (13) Find the total market surplus taking the negative externality into account. (c) Propose a qualitative policy that could improve welfare in this market. } [41 [Bonus] Find an optimal policy, that is, one that maximizes the total surplus in the market, taking the externality into account