Prior to the introduction of smart phones, the demand for existing cell phones was Qe = 100 Pe. The cost of producing existing phones was Ce = 40, and the price was Pe = 70. After the introduction of smart phones, the demand for existing cell phones changed to Qe = 80 Pe, and the price for existing cell phones stayed the same at Pe = 70. The demand for smart phones is Qs = 200 Ps. The price of smart phones is Ps = 100, and the marginal cost of smart phones is Cs = 50. (a) Who benefits and who loses from the introduction of smart phones? How much do they gain and lose? What is the change in total surplus from introduction of smartphones? (b) What is the externality of smart phones? Is the net externality positive or negative? (c) Illustrate the problem and your solution on a graph (or two).