Problem Set 4.pdf x T 1 + 125% Problems: 7) [12 points total] Reconsider the competitive beef market from Problem Set #1. The demand and supply in the market are I QD = 66.05 - 13.75P and Qs = 55P - 112.7 where price is measured in dollars per pound and quantity is measured in billions of pounds. In the absence of any government intervention, the equilibrium price and quantity in this market are P = 2.60 and Q = 30.3 billion, respectively. a. [1 point] The government decides to support beef farmers by giving them a $0.20 subsidy per pound of beef. Suppose that the market price of beef remains at $2.60 and that the farmers keep the entire $0.20 subsidy. What is the quantity demanded and what is the quantity supplied? b. [3 points] If the market price does not change from $2.60, there is a surplus of beef and the market is not in equilibrium. What is the new equilibrium quantity and prices? By prices (plural), I mean the market price consumers pay as well as the price producers receive inclusive of the subsidy? c. [4 points] Graph the original (i.e., without any government intervention) and new (i.e., with the subsidy) equilibria in the same supply and demand figure. Show the change in consumer surplus, change in producer surplus, government cost, and deadweight loss associated with the introduction of the subsidy. d. [4 points] Using your graph, what is the change in consumer surplus due to the subsidy? What is the change in producer surplus? What is the cost to the government? What is the deadweight loss? (To be clear, I'm asking for four specific numbers, not definitions.)