An industry's inverse demand wasPD= 20 - 0.1Qand its inverse supply wasPS= 4 + 0.1Q.
1. Calculate the consumer surplus, producer surplus, government revenue and deadweight loss for taxes of $4, $8, $12 and $16 per unit sold.
2. Graph government revenue and deadweight loss as functions of these tax rates.
3. What tax maximizes government revenue?