Subsidy+answer


 * 1) 200-P=20+2P so P=60 and Q=140
 * 2) with subsidy of $15... 200-P= 20+2(P+15).... SO P=50 Q= 150
 * 3) COST TO GOV= SUBSIDY PER UNIT (15) X Q 150= 2250
 * 4) Change in CONSUMER SURPLUS=(60-50)x140=1400 +0.5x 10x10=50 so total change is 1450
 * 5) Increase in Producer surplus (be careful)= (5x140) + 0.5x5x10=725
 * 6) So welfare loss= 2250- (1450+725)=75
 * 7) Revenue for firm= 65x150=9750
 * 8) Spending by consumers=150x50=7500
 * 9) PED=0.43