A positive externality of $120 per unit has been associated with the market described by the following equations: Supply: Qs = 2P - 100 Demand: Qd = 500 -P.

In order to eliminate the deadweight loss, should the government intervene by implementing a tax or a subsidy? What should be the amount (per unit) of such tax or subsidy?

Assume that government intervention eliminates deadweight loss as described in part (a). Fill in the following table. Show your procedure.

Consumer surplus Producer surplus Government revenue Benefit to third parties Total surplus Deadweight loss

Suppose the government, instead of the policy described in part (a), establishes a $240 subsidy for buyers in this market. Fill in the following table. Show your procedure.

Consumer surplus Producer surplus Government revenue Benefit to third parties Total surplus Deadweight loss