$($Note: use the following information for Externality, Part A thru C$)$

Suppose the demand and supply curve for crude oil at any given period is

$P_d=240-1\mathrm{.}7Q$ and $P_s=32+2\mathrm{.}3Q$

Where price is measured in dollars and quantity is measured in barrels. Furthermore, for each barrel of oil

produced, there is $$36$ worth of negative externality.

The market currently unregulated and produces $52$ barrels of oil and the market price is $$151\mathrm{.}60.$

Externality, Part A:

What is the Total Social Welfare before government regulation?$($Note: use the following information for Externality, Part A thru C$)$

Suppose the demand and supply curve for crude oil at any given period is

$P_d=240-1\mathrm{.}7Q$ and $P_s=32+2\mathrm{.}3Q$

Where price is measured in dollars and quantity is measured in barrels. Furthermore, for each barrel of oil

produced, there is $$36$ worth of negative externality.

The market currently unregulated and produces $52$ barrels of oil and the market price is $$151\mathrm{.}60.$

Externality, Part A:

What is the Total Social Welfare before government regulation?

Externality, Part B:

Suppose the government like to impose a Pigovian tax to internalize the negative externality.

AFTER the correct Pigovian tax is instituted, what will be the new market price? $($round answer to nearest dollar.$)$

$$

Question $20$

$8$ pts

Externality, Part C:

Who, consumers or producers, bares the larger share of the tax burden? Explain how you know in a few sentences. $($Hint: you do not need to calculate the exact tax revenue$).$

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