Suppose that the demand and supply functions for good x are given as follows. O 120- 2P, +I + P, !! and Q =-30+ P- 2t + s-2f where P, denotes the price of good x. P denotes the price of a related product y, I denotes income, t denotes tax firms face, s denotes subsidy and f denotes factor prices. What happens to the demand and supply of x as subsidy to firms (s) rises? Both supply and demand shift to the right. Supply shifts to the left while demand stays the same. O No change in Demand and Supply. Supply shifts to the right while demand stays the same.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.10P
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Suppose that the demand and supply functions for good x are given as follows: O 120 - 2P, +I + P
and Q =-30+ P - 2t + s - 2f where P, denotes the price of good x. P denotes the price of a related
%3D
product y, I denotes income, t denotes tax firms face, s denotes subsidy and f denotes factor
prices.
What happens to the demand and supply ofx as subsidy to firms (s) rises?
Both supply and demand shift to the right.
Supply shifts to the left while demand stays the same.
No change in Demand and Supply.
Supply shifts to the right while demand stays the same.
Transcribed Image Text:Suppose that the demand and supply functions for good x are given as follows: O 120 - 2P, +I + P and Q =-30+ P - 2t + s - 2f where P, denotes the price of good x. P denotes the price of a related %3D product y, I denotes income, t denotes tax firms face, s denotes subsidy and f denotes factor prices. What happens to the demand and supply ofx as subsidy to firms (s) rises? Both supply and demand shift to the right. Supply shifts to the left while demand stays the same. No change in Demand and Supply. Supply shifts to the right while demand stays the same.
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