Consider a Perfectly Competitive Market with Inverse Market Supply $P = 5 + 3 Q ^ { s }$

question 20

Multiple Choice

Consider a perfectly competitive market with inverse market supply $P = 5 + 3 Q ^ { s }$ and inverse market demand $P = 50 - 2 Q ^ { d }$ . Suppose the government subsidizes this market with a subsidy of $\$ 5$ per unit. What is the equilibrium quantity traded after imposition of the subsidy?

• A) \(Q = 10\)
• B) \(Q = 12.5\)
• C) \(Q = 9\)
• D) \(Q = 7.5\)

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Definitions:

Tax Rates

The percentage at which an individual or corporation is taxed, which can vary based on income levels, jurisdictions, and the type of taxes being calculated.

Dividend Irrelevance

Dividend irrelevance theory suggests that the dividend policy a company follows has no effect on the company’s stock price or its cost of capital.

Transaction Costs

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Floatation Costs

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