Problem 3: Supply and Demand, Consumer and Producer Surplus (22 points) In order to reduce environmentally harmful emissions, the state of California wanted to discourage the use of large SUVs. With the help of some talented Public Affairs Majors from UCLA, the state found that the demand and supply schedules of SUVs were the following: (in thousands) (in thousands) __ __ _ __ _ __ _ _ _ __ a) Sketch the market for SUVs includingthe supply and demand curves according to the schedule and label the equilibrium price and quantity. (5 points) b) Suppose the California decided to institute a tax of $3000 per SUV purchased. On your graph, illustrate the effects of the excise on the market for SUVs. Include the price paid by consumers, the price received by producers, the quantity sold with the tax, the consumer surplus, the producer surplus, the government revenue, and the deadweight loss due to the tax. (6 points) c) Calculate the consumer and producer surplus before and after the tax, the amount of government revenue collected, and the deadweight loss. (6 points) d) Suppose that due changes in a combination of factors including higher gas prices, changes in consumer preferences and reduced incomes, the demand for SUVs has become more elastic since the data on demand was collected. How would this effect who bears the burden of the tax? How would it effect the amount of deadweight loss? (5 points)