7.5 With a $0.50-per-loaf subsidy, the new domestic price becomes $1.50 per loaf. The new lost surplus

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7.5 With a $0.50-per-loaf subsidy, the new domestic price becomes $1.50 per loaf. The new lost surplus is the area of the small shaded triangle in the diagram: (1/2)($0.50/loaf)(1,000,000 loaves/month) = $250,000 per month. (LO5)

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