The Market Supply and Demand Functions for a Good Traded

Essay

The market supply and demand functions for a good traded on a perfectly competitive market are:
Qd = 70 - 2P and Qs = 20 + 3P
(i) What is the equilibrium price and quantity on this market?
(ii) If the consumption of each unit of this good gives rise to a social cost of $5, what is the socially optimal equilibrium quantity and price? Assume that consumers pay a tax of $5 per unit.
(iii) If the consumption of each unit of this good gives rise to a social benefit of $10, what is the socially optimal equilibrium quantity and price? Assume that consumers receive a subsidy of $10 per unit.