Question

If the demand and supply of Chinese coal are
Qd = 60 − 0.5P.
Qs = −2 + 2P.

Determine the new (1) quantity (2) inverse demand price and (3) inverse demand quantity if a
subsidy of $10 is paid on Chinese coal?

Answer 1

$$Q_d=60-0.5(p-10)$$

$$Q_s=-2+2p$$

$$60-0.5p+5=-2+2p$$

$$p=22.8$$

$$Q=43.6$$

$$pQ=994.08$$