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?
For profit maximization, we have MR=MC
Equating MR=MC we ...
Shows how to calculate the equilibrium price and quantity and how it can be affected by governmnet subsidy.