1.19. This question uses the algebraic method to solve prob-

lems from Appendix 3A and Appendix 6A. Suppose the monthly demand and supply for iPods are given by the following equations:

P = 500 - 0.001Q Demand Curve P = 200 + 0.000505 Supply Curve

a. Use the demand and supply curves to solve for the equilibrium price and quantity. Create a diagram to depict this equilibrium.

b. Suppose the government is considering introducing a tax on electronics that would add $50 to the cost of an iPod. Solve for the new equilibrium quantity, the price paid by consumers, the price received by pro-

ducers (excluding the tax), the tax revenue collected, and the buyer's and seller's shares of the tax burden.

c. How did the consumer surplus, producer surplus, and total economic surplus change?

d. What is the deadweight loss created by the tax?

How much comes from consumers? How much from producers?