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Consider a free market with demand equal to Q = 900 - 10P and supply equal to Q = 20P. a.What is the value of
Consider a free market with demand equal to Q = 900 - 10P and supply equal to Q = 20P.
a.What is the value of consumer surplus? What is the value of producer surplus?
b.Now the government imposes a $15 per unit subsidy on the production of the good. What is the consumer surplus now? The producer surplus? Why is there a deadweight loss associated with the subsidy, and what is the size of this loss?
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