Is there a deadweight loss from the subsidy

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Consider the market for picture frames. a. If the market has a very elastic demand curve and inelastic supply curve, how would the application of a subsidy be shared between producers and consumers? Use the tools of consumer surplus and producer surplus to answer this question. Is there a deadweight loss from the subsidy? b. If instead, the picture frame market were characterized by a very elastic supply curve and an inelastic demand curve, how would the application of a subsidy be shared between producers and consumers. c. Compare and contrast your answers from (a) and (b) and discuss some implications of the subsidy. c. Compare and contrast your answers from (a) and (b) and discuss some implications of the subsidy.

Reference no: EM131244738

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