Consider the following supply and demand system: Qs = 5Ps and Qd = 500 – 5PD...

Consider the following supply and demand system: Qs = 5Ps and Qd = 500 – 5PD a) Determine the competitive equilibrium. b) Suppose a subsidy of $10 is imposed on this market. A subsidy is essentially a negative tax. Determine the price that sellers receive, the price that consumers pay, and the number of units that are transacted in this market. c) Who benefits the most from the subsidy?

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Rahul Sunny answered 1 year ago

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