Question: We have demand equation: P = 6-Q and supply equation: P = Q. a. Calculate the equilibrium price, equilibrium quantity and the total surplus. b.

We have demand equation: P = 6-Q and supply equation: P = Q. a. Calculate the equilibrium price, equilibrium quantity and the total surplus. b. Suppose government imposes a per-unit tax of $1 on producers. Derive the new supply curve and calculate the new equilibrium price and quantity. Is there any dead weight loss? c. Now suppose demand becomes more elastic and we have a new demand equation P=4-Q/3. How much is the deadweight loss from a tax of $1 per unit sold? Is the deadweight loss greater or smaller than that in question (b)? Why?

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