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

question 49

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 deadweight loss resulting from the subsidy?

• A) 0, subsidies do not have a deadweight loss
• B) 2.5
• C) 5
• D) 7.5

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