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2. Say the demand curve for rice is Q = 100 - 10p and the supply curve is Q = 10p. The government provides firms
2. Say the demand curve for rice is Q = 100 - 10p and the supply curve is Q = 10p. The government provides firms with a specific subsidy of s = 1 per unit. a. What are the original and new equilibrium prices and quantities? b. What effect does this policy have on consumer surplus, producer surplus, and deadweight loss? c. If society cared only about the well-being of consumers, would a competitive market achieve that objective given that the government cannot force firms to produce more than the competitive level of output? How would your answer change if society cared only about maximizing producer surplus
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