Answer 1. a. Marginal buyers WTP at Q=25 is $350.
Consumer surplus= WTP- equilibrium Price= $350-$200=$150
b. CS=0.5(400-200)100= $10000
PS=0.5(200)(100)=$10000
TOTAL SURPLUS=$20000
c. Tax=$100
CS=0.5(400-250)(75)=$5625
PS=0.5(150)(75)=$5625
Tax revenue=(250-150)(75)=$7500
Total surplus=$11250
DWL=0.5(250-150)(100-75)=$1250
d. In the market without tax, consumers who are willing to pay till $200 will buy tickets and producers who are willing to get $200 will sell tickets.
In the market without tax, consuners who are willing to pay till $250 will buy tickets and producers who are willing to get $150 will sell the tickets
e. At equilibrium Quantity, demand meets supply , so there is no shortage of surplus in the market. So the total surplus is maximum at the equilibrium Quantity. At any other price level, there are distortions in the market, which leads to deadweight loss which reduces the total surplus.
Note-According to HOMEWORKLIB RULES first question is answered
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