Suppose that we have a market with Demand given by: =4,000200 And Supply given by: =100500

Suppose that the local mayor is concerned that they are producing Deadweight Loss in this case and are not even raising any revenue. The mayor therefore proposes instituting a tax instead of this quota that will still result in a Q of 500 units, but, as the mayor says, it would also increase Total Surplus because of the revenue it raises. 3. If the Mayor wants to reduce the quantity sold in this market to be equal to 500 units, then what size tax does the mayor need to put into place? Show your work. [2 points]