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4. The demand and supply of day care services in Quebec may be approximated by the following equations: P = 50 - 0.40Qd P =

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4. The demand and supply of day care services in Quebec may be approximated by the following equations: P = 50 - 0.40Qd P = 25 + 0.10Qs where Q is measured in millions of days and P is the price per day. a) Calculate the equilibrium price and quantity. b) Determine the amount of consumer surplus and producer surplus. c) Plot the demand and supply curves and illustrate the equilibrium price and quantity. d) Now suppose that the government introduces a subsidy of $25 per day for day care providers: i) Calculate the new equilibrium price and quantity and illustrate the new equilibrium in the diagram drawn for part c). ii) Calculate and illustrate the deadweight loss resulting from the subsidy

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