Posted by
**excel** on
.

Suppose that a perfectly competitive market is described by the following supply and demand equations: QD = 300 – P and QS = 2P. Suppose that government subsidizes this good: for each unit sold government pays $15 to the seller.

(a) What is the government expenditure on this subsidy?

(b) What is the deadweight loss as a result of this subsidy?

Thanks for your help.