Use the following market Demand and Supply equations to answer BOTH questions.(Circle final answers; make sure final answer per section is on this page.)

Q^d = 50 - .05PQ^S = -2 + .01P

Be careful with the decimals!

1.You are given the demand and supply equations for a market presented above, consider that the government imposes a price ceiling of $600 per unit on the market.

A.Compute Consumer and Producer Surplus BEFORE the price ceiling is imposed. (Hint: Solve for Pe before you solve for Qe. Round to 2 decimal places as you work through this problem.)

B.Compute the quantity demanded and the quantity supplied at the ceiling price.

C.Determine the quantity traded (or exchanged) at the ceiling price.Explain.

D.Is there a shortage or a surplus at the ceiling price?Compute the amount of any shortage or surplus.

E.Compute consumer surplus under the ceiling price - compute both the maximum and minimum consumer surplus attainable.

F.Compute producer surplus at the ceiling price.Are producers better off or worse off due to the ceiling?By how much are producers better off or worse off due to the ceiling?

G.Graph this market scenario. Be sure to include both curves, all intercepts, prices, and levels of output. Make sure you identify the quantity traded at the ceiling price.

(Circle final answers; make sure final answer per section is on this page.)

2.Again, consider the market presented to you on the previous page. Consider the government imposes an excise tax of $200 per unit on sellers of the product.

Recall,

Q^d = 50 - .05P

Q^S = -2 + .01P

A.Compute the price paid by consumers (P^d) and the price received by producers (P^s) after the implementation of the tax.

B.Compute the market equilibrium quantity traded with the tax.

C.Calculate net benefit to society with the tax. (Identify/Label the individual components you calculate as you go.)

D.Compute the value of any deadweight loss created by the tax.

E. Graph this market scenario. Be sure to include all curves, all intercepts, prices, and levels of output. Make sure you identify the quantity traded with the tax and areas of deadweight loss and tax revenue.