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Consider the following perfectly competitive market: Price QD QS 0 100 40 1 100 60 2 100 80 3 100 100 4 100 120 5
Consider the following perfectly competitive market:
Price | QD | QS |
0 | 100 | 40 |
1 | 100 | 60 |
2 | 100 | 80 |
3 | 100 | 100 |
4 | 100 | 120 |
5 | 100 | 140 |
6 | 100 | 160 |
Initially there is no government intervention in this market. Then the government introduces a subsidy to be paid to suppliers of $2 per unit. The effect on the market outcome will be?
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