Question 08 Consider the following demand and supply curves for annual gym memberships in a certain city. Demand: Q = 500 - 2p, Supply: Q$ = 0.5p - 50 Assume that the city government offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. Recalling what you learned in chapters 02 & 03, find the equilibrium pre and post subsidy. Which of the following alternatives is correct? (a) The share of the subsidy benefit that goes to the buyers is 20% (b) The share of the subsidy benefit that goes to the sellers is 30% (c) The share of the subsidy benefit that goes to the buyers is 80% (d) The share of the subsidy benefit that goes to the sellers is 70% Question 09 Consider the same information in question 08. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Which of the following alternatives is correct? (a) The change in consumer surplus is an increase of $1,300 (b) The change in producer surplus is an increase of $325 (c) The change in total surplus is a reduction of $125 (d) The government expenditure with this subsidy is $1,500