Question 7 (4 points) Suppose that the demand and supply functions for good x are given as follows: Of =120 -2P, + I + P, and Of = -30+ P. -2t+s -2f where Px denotes the price of good x, P, denotes the price of a related product y, I denotes income, t denotes tax firms face, s denotes subsidy and f denotes factor prices. What happens to the price and quantity equilibrium of good x as subsidy to firms (s) rises? Price equilibrium falls while quantity equilibrium rises. Price equilibrium rises while quantity equilibrium falls. Both equilibrium price and quantity fall. Both equilibrium price and quantity rise