Based on the accompanying graph which depicts the market for CAT scans, in the free market, the price of a CAT scan would be V . Market for CAT Scans 600 In the free market the quantity of CAT scans consumed would be V . 550 500 The government subsidizes the CAT scans and pays hospitals $450.When the 450 subsidy is paid there will be V CAT scans produced. 400 . . H 350 Consumers are Willing to pay V out of the pocket expenses for a CAT scan. 3 E 300 The amount of the subsidy is V . 250 200 Subsidizing CAT scans results in V CAT scans being consumed. 150 100 50 0 20 40 60 80 100120140160180 200 220 Quantity