23. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are given by QD = 900 - 2p 1 Qs = -100+P (a) Find the equilibrium Q and p in this market. Suppose that the government want to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 20%. (b) What is the level of subsidy (x) which is required? (c) What would be the change in producer surplus from the subsidy? Is this larger than the change in consumer surplus? (d) Calculate the deadweight loss from this subsidy. (e) Will the government's subsidy meet its objective?

23. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are given by QD = 900 - 2p 1 Qs = -100+P (a) Find the equilibrium Q and p in this market. Suppose that the government want to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 20%. (b) What is the level of subsidy (x) which is required? (c) What would be the change in producer surplus from the subsidy? Is this larger than the change in consumer surplus? (d) Calculate the deadweight loss from this subsidy. (e) Will the government's subsidy meet its objective?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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