= 5. A monopolist faces inverse demand P. 30 4Q and has constant marginal cost MC = 6. Currently the government provides a per-unit subsidy s to the firm. i. What is the quantity provided by the monopolist as a function of subsidy s? What price does the monopolist charge? ii. What is the size of the per unit subsidy s for which the monopolist will pro- duce the socially efficient quantity? How much deadweight loss is saved by this subsidy? What is the total payment that the government must make to the monopolist if this subsidy is enacted? 6. (Optional! Turn it in with the final exam to receive extra credit!) In the previous part we obtain that eliminating all the DWL with a subsidy is quite expensive. Next we examine whether eliminating some but not all of the DWL could be worthwhile. Continue with the setup of the question above. i. As a function of the per unit subsidy s, what is the total subsidy payment made by the government? ii. What is the deadweight loss when the subsidy is s? iii. Suppose the government's objective is to maximize the difference between saved DWL and dollars spent on the subsidy. Argue that the best subsidy is still S= 0