Suppose the market for laser pointers consists of 2 types of people. Professors use laser pointers to indicate important elements on slides and cat lovers use lase pointers to entertain their cats. Each professor has an individual demand of qprof = 8 - - P and each cat lover has an individual demand of qCat = 20 - P. a) (4 marks) If there are 25 consumers with a demand of qprof and 15 consumers with a demand of qCat, then what is the market demand curve (for all 40 people)? Illustrate it in a graph. Make sure to label your graph. b) (5 marks) Suppose the (inverse) market supply curve is P = Q, what is the market equilibrium outcome? (Hint: Both groups buy laser pointers and your quantity should be somewhere between 200 and 275.) What is the consumer and producer surplus in this case? (Reminder: Your consumer surplus will be ugly to calculate since the demand curve is discontinuous). c) (5 marks) The government has become concerned about long term environmental harm from improper disposal of the laser pointers. To alleviate some of the burden, the government decides to impose a $5 excise tax on each laser pointer sold. What is the new equilibrium? How much has the government raised in tax revenue? How big is the dead weight loss? . CS Scanned with CamScanner + Drag and drop your files or click to browse