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3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand...


3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand curve at p = 101. A subsidy of $5
3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand curve at p = 101. A subsidy of $5 per unit is given to producers. Using a diagram, explain how the subsidy is shared between consumers and producers. What is the Deadweight Loss? (30%)
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Solution There is no deadweight misfortune. supply is fixed out an amount of 1013 so it doesnt change. The whole endowment i

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3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand...
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