Suppose demand is given by

=1001/3Q^d

and market supply is given by

=1/6Q^S

Note:You cannot input fractions for these exercises.

1. Fill in the blank with your calculated answer. What is the equilibrium quantity, (Q*)?

2. Fill in the blank with your calculated answer. With two decimal places, what is the equilibrium price (P*)?

3. Fill in the blank with you calculated answer. What is the consumer surplus (CS)?

4. Fill in the blank with your calculated answer. What is the producer surplus (PS)?

5. Fill in the blank with your calculated answer. What is the social surplus (SS)?

6. Fill in the blank with your calculated answer. What is the consumer's willingness to pay (WTP) at the equilibrium quantity, Q*?

7. Fill in the blank with your calculated answer. What is the production cost (COST) to produce Q*?

8. Fill in the blank with your calculated answer. Calculate the social surplus (SS) using the willingness to pay (WTP) and the production cost (COST).

9. Fill in the blank with your calculated answer. Now suppose we set Q*=190. Rounded off to a whole number, what is the deadweight loss (DWL)?

10. Fill in the blank with your calculated answer. Suppose the government imposes a consumption tax,=$10. What is the new equilibrium quantity,?

11. Fill in the blank with your calculated answer. Given the new equilibrium quantity,, what is the new equilibrium price charged by firms,?

12. Fill in the blank with your calculated answer. Given the new equilibrium quantity,, what is the new equilibrium price paid by consumers,?

13. Fill in the blank with your calculated answer. Rounded off to a whole number, what is the burden of the tax on consumers?

Hint:The burden on consumers is the change in consumer surplus,=, caused by the tax.

14. Fill in the blank with your calculated answer. Rounded off to a whole number, what is the burden of the tax on firms?

Hint:The burden on firms is the change in producer surplus,=, caused by the tax.

15. Fill in the blank with your calculated answer. How much revenue,, did the government collect by imposing the consumption tax,?

16. Fill in the blank with your calculated answer. What is the social surplus with the consumption tax,?

17. Fill in the blank with your calculated answer. What is the deadweight loss (DWL) of the tax?

18. Fill in the blank with your calculated answer. Now suppose that instead of a consumption tax, the government imposes a production tax,=$10, on firms. What is the new equilibrium quantity,?

19. Choose the best option to complete the following sentence. The burden of the tax on firms with the production tax,, is ___________ the burden on firms under the consumption tax,.

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