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Suppose that the government has decided that the goods produced in a market is beneficial to the society and that it has decided to subsidize
Suppose that the government has decided that the goods produced in a market is beneficial to the society and that it has decided to subsidize it with a per-unit subsidy. The demand and the supply curves are given by Q^d = 10 1/2 P^d , Q^s = P^s 2 when P^s 2. If the government decides on a subsidy of $3 per-unit, find the new equilibrium quantity and the prices paid by both the consumers and the sellers.
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