Assume that in the market for computer, the demand curve is Q=100-P. The market supply curve (private cost) is Q=P-10.

Assume that in the market for computer, the demand curve is Q=100-P. The market supply curve (private cost) is Q=P-10. The production process causes pollution that creates a per unit external harm equal to 0.5Q.

1. Calculate the market equilibrium (price and quantity), consumer, producer and society surplus assuming that the firms ignore the external damage caused by their production.
2. The government is interesting to achieve the optimal quantity to the society. Offer a solution that will maximize the welfare. Calculate the new consumer, producer and economy welfare.

Support your answer (both for a and b) with demand and supply curve.