Suppose in a perfectly competitive market, the demand is given as Q=100-2P and the supply is given as Q=P-20. There is an external cost of $6 for every unit produced. I. What is the social surplus in this market? ||. The government realized this externality and imposed a Pigouvian tax of $6 per unit on producers. What is the change in the social surplus as a result of this tax? Two countries, A & B, produce and consume an identical good. Country A's demand and supply curves are: Q=250-2P & Q=P, country B's demand and supply curves: Q=100-P & Q=3P. |. What is the world price if the two countries can trade freely? ll. What is the change in the consumer surplus and the producer surplus in country A as a result of the free trade (comparing to when there is no trade)