Unformatted text preview: PS is 300. The DWL is zero. The price after the subsidy is P=77.5 for an equilibrium quantity of 11.25. The PS is 379.6 and the CS is 126.5. Government expenditure is 112.5 while the deadweight loss is 6.25. Because of the subsidy, both the CS and PS increase, some DWL due to over production is created and of course the government is paying the cost of the subsidy. 20 10 P=20+6q 80 100 10 P=100-2q...
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This note was uploaded on 10/04/2011 for the course ECONOMICS 281 taught by Professor Vg during the Spring '09 term at University of Alberta.
- Spring '09