The supply and demand functions of a good are given by

where P, Q_S and Q_D denote the price, quantity supplied and quantity demanded, respectively.
(a) Draw sketch graphs of these functions on the same diagram with quantity on the horizontal axis and price on the vertical axis.
(b) Calculate the producer’s and consumer’s surpluses at the equilibrium point.
(c) If the government imposes a fixed tax on this good explain the effect, if any, on 

(i) equilibrium price and quantity;
(ii) consumer’s surplus.

Transcribed Image Text:

P = 32 + Q P = 140 - 3.