Home / Questions / Suppose the supply of wheat is given by S 4P and demand for wheat is given by D=100 – 6P. ...
Suppose the supply of wheat is given by S = 10 + 4P, and demand for wheat is given by D=100 – 6P. What is the equilibrium price of wheat and how many are sold? Suppose the government institutes a subsidy of t = $2 per unit of wheat sold. What is the equilibrium quantity of wheat sold after the subsidy is imposed? What price do consumers pay? What price do suppliers receive? Under the subsidy described in the previous part, how much tax revenue is needed to pay for it? What is the deadweight loss of the subsidy? Briefly (in a few sentences) describe why there is a deadweight loss in this case?
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