Explore BrainMass

Equilibrium price and quantity and governmnet subsidy

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

For Firm Y:

Use the demand function: P = 30 - 2Q
And the marginal cost function: MC = 20 to determine P and Q for profit maximization.

Then, suppose a government subsidy of $6 per unit is imposed.

What does the firm do with respect to price and quantity?

© BrainMass Inc. brainmass.com March 21, 2019, 5:05 pm ad1c9bdddf

Solution Preview

For profit maximization, we have MR=MC
Equating MR=MC we ...

Solution Summary

Shows how to calculate the equilibrium price and quantity and how it can be affected by governmnet subsidy.