How does the subsidy affect the total number of miles run

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Suppose the Government decides to subsidize exercise by $2 for every mile (Q) consumers run at a health club that charges by the mile. The current demand for running is Q=12-2p. The supply of miles available by the track owners is S=2p. What is the initial equilibrium price and quantity? How does the subsidy affect the total number of miles run? What is the new price, including the subsidy?

Reference no: EM13223444

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