Discussion:
Demand in a perfectly competitive market is Q = 100 - P . Supply in that market is Q = P - 10.
(1) What is the market equilibrium price and quantity?
(2) Given that price and quantity, how much consumer surplus, producer surplus, and dead- weight loss is there?
(3) If the government imposes a $10 per unit sales tax, what is the new equilibrium price and quantity? Once the government imposes the tax, how consumer surplus, producer surplus, and dead-weight loss is there?