A market in perfect competition has the following demand and supply equations: Demand: QD(P) = 400 – 2 P Supply: QS(P) =

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A market in perfect competition has the following demand andsupply equations:
Demand: QD(P) = 400 – 2 P
Supply: QS(P) = 3P – 25
1) Draw the supply and demand diagram withcorrect numbers on the endpoints. Solve the equilibrium price andquantity and label both on the graph. Solve and label the consumersurplus. Solve and label the producer surplus.
2) Impose a tax of 10 percent. Solve the pricepaid, the price received and the quantity sold. Draw anew supply and demand diagram with the prices andquantities that will result when a 10 percent tax is imposed. Bothcalculate and show on the diagram: (i) the total tax revenue paid,(ii) consumer surplus, (iii) producer surplus, and (iv) the excessburden of the tax.