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Suppose the estimated market demand and supply (bottles/month) for a new product call hydro water are given by: Qd = -50P + 1000 Qs =

Suppose the estimated market demand and supply (bottles/month) for a new product call hydro water are given by:

Qd = -50P + 1000

Qs = 100P - 500

whereQdis the market demand,Qsis the quantity supplied andPis price of a 1 liter of bottled hydro water. The market is assumed to be competitive.

Illustrate the Consumer Surplus (CS) and Producer Surplus (PS) on the diagram from part (c) and calculate the value of these at the market equilibrium. What is the total value of social welfare?

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