Suppose the demand curve is = 10 and the supply curve is = .

1. Find the consumer surplus, producer surplus, and total welfare under perfect competition.

2. Compute the CS, PS, government revenue, and total welfare with taxes of $2, $4, -$2, and -$4 (negative taxes are a subsidy.)

3. Find the consumer surplus, producer surplus, and total welfare if there is a monopoly with marginal cost curve = .

4. Compute the CS, PS, government revenue, and total welfare with taxes of $2, $4, -$2, and -$4 again but with the monopoly.

5. Draw three graphs labeling these quantities, one for perfect competition, one for perfect competition with a tax, and one for monopoly.