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An industry's inverse demand was P^D = 20 - 0.1Q and its inverse supply was P^S...

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Economics

An industry's inverse demand was P^D = 20 - 0.1Q and its inversesupply was P^S = 4 + 0.1Q.

  1. Calculate the consumer surplus, producer surplus, governmentrevenue and deadweight loss for taxes of $4, $8, $12 and $16 perunit sold.

  2. Graph government revenue and deadweight loss as functions ofthese tax rates.

  3. What tax maximizes government revenue?

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