For years the government has subsidized higher education through grants; consider the demand and supply for college credit hours at a local private liberal arts college QD = 6,000 – 300P QS = 700P – 500 where P is the price, in hundreds of dollars, and Q is the number of credit hours per semester. Suppose the government subsidizes credit hours at a rate of $120 per hour. Calculate changes in consumer surplus. What is the size of the deadweight loss?

Microeconomic Theory
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Chapter14: Monopoly
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For years the government has subsidized higher education through grants; consider the demand and supply for college credit hours at a local private liberal arts college
QD = 6,000 – 300P
QS = 700P – 500

where P is the price, in hundreds of dollars, and Q is the number of credit hours per semester. Suppose the government subsidizes credit hours at a rate of $120 per hour. Calculate changes in consumer surplus. What is the size of the deadweight loss?

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