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Suppose that a perfectly competitive market is described by the following supply and demand equations: QD = 300 – P and QS = 2P. Suppose that government subsidizes this good: for each unit sold government pays $15 to the seller. 

(a) What is the government expenditure on this subsidy? 
(b) What is the deadweight loss as a result of this subsidy? 

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9480645

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