Suppose that a market is initially in equilibrium. The initial demand curve is 90 d P Q . The initial supply curve is 2 s P Q . Suppose that the government imposes a $3 tax on this market. Answer the following questions as you solve for the change in consumer surplus due to the tax. (use the graph framework below if helpful)

1. Solve for initial equilibrium (before tax)

P^E 0:_________________________________

Q^E 0:_________________________________

Consumer Surplus (pre tax): $______________________

2. Solve for Price Elasticities of Demand and Supply at equilibrium (include sign)

E^D:_________________________________

E^S:_________________________________

3. After imposition of tax, solve for the following:

P E 1:_________________________________

P^d :_________________________________

P^s :_________________________________

Q^E 1:_________________________________

Consumer Surplus post tax: $_________________________________

Of the reduced CS, $________ = Tax Revenue, and $_________ = DWL