Consider a free market with demand equal to q 5 1200

Finance

Consider a free market with demand equal to Q 5 1,200 - 10P and supply equal to Q 5 20P.

a. What is the value of consumer surplus? What is the value of producer surplus?

b. Now the government imposes a $10 per unit subsidy on the production of the good. What is the consumer surplus now? The producer surplus? Why is there a deadweight loss associated with the subsidy, and what is the size of this loss?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91940749

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