2. Refer to Figure below and answer the following questions. The figure plots the domestic market demand and supply for cigarette. Assume that the size of external damage/cost per unit consumption of cigarette is estimated to be 3 dollars. 1P 10 20 30 40 50 60 70 80 90 100 110 120 2 (a) What is the equilibrium price (without any interventions)? Calculate the consumer surplus, the producer surplus, and the total surplus. (b) Find the socially optimal quantity. (c) What is a price ceiling that achieves the social optimum in (b)? Cal- culate the consumer surplus, the producer surplus, and the total surplus.

(d) What is a price floor that achieves the social optimum in (b)? Cal- culate the consumer surplus, the producer surplus, and the total surplus. (e) What is a corrective tax that achieves the social optimum in (b)? Calculate the consumer surplus, the producer surplus, and the total surplus.