The accompanying graph (on next page) shows the demand curve for gasoline and the supply curve for gasoline. The use of gasoline creates negative externalities, including CO2, which is an important source of global warming. Using the graph and the table below, identify:
• The equilibrium price and quantity of gasoline
• The producer and consumer surplus at the market equilibrium
• The cost of the externality at the free-market equilibrium
• The net social benefits arising at the free-market equilibrium
• The socially optimal price of gasoline
• The consumer and producer surplus at the social optimum
• The cost of the externality at the social optimum
• The net social benefits arising at the social optimum
• The deadweight loss due to the externality
