Assume the government places a $1.00 subsidy on the sale of every bottle of hand santizer....

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Assume the government places a $1.00 subsidy on the sale of every bottle of hand santizer. The subsidy is paid to the produce

Price (per bottle) 0 1 2 3 4 5 6 7 8 Quantity (billions of bottles) Instructions: Round your answers for price to two decimal

business economics

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Answer 1

Answer #1

Answer 1:

After the subsidy put in place the consumers pay a price of $2 per bottle and the price producers receive after the subsidy is paid is $3 (2 from consumer+1 as subsidy from the government) per bottle.

Answer 2:

After the subsidy is put in place, the equilibrium quantity is 4 billion bottles of hand sanitizer and so the government pays $4 billion as a subsidy to the producers.

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Answer 2

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Assume the government places a $1.00 subsidy on the sale of every bottle of hand santizer....

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