1. Suppose the demand for village defense in Temeria is Qd=300-2P, and the supply is Qs=4P.
a. Graph the supply and demand curves. (3 points)
b. Solve for the equilibrium price and quantity. Show this point on your graph from part (a). (5 points)
c. How much consumer surplus is created in this market? How much producer surplus? (4 points)
d. Suppose the King of Temeria puts a tax of 10 orens per unit on village defense. Write an equation showing the relationship between the price paid by consumers and the price received by sellers. (2 point)
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