Consider the labour market for farming during the harvest season. Assume the market is perfectly competitive, with a labour demand function Q_D = 12-2P and a labour supply function Q_S = 2P, where P is the wage.

a) What are the consumer (farm owners) surplus and producer (farm workers) surplus in equilibrium?

b) What is the price elasticity of demand at the equilibrium?

c) Suppose the government subsidizes the farm owners (consumers) $1 for every unit of labour purchased. Then, compute the quantity of labour traded in the market, the wage received by the workers and the wage paid by the farm owners.

d) Calculate the consumer surplus and producer surplus in the presence of the subsidy in part c).