EXERCISE 1 Initially, the inverse market demand function for a commodity was PD(Q) = 484 s The market supply function for this commodity was Q3 (P) = P2. (1) Find the market equilibrium for this commodity (the equilibrium price and quantity). Then the state government decided to introduce a 10% sales tax on this commodity which is paid by the consumers. Understanding that this tax may now distort the market equilibrium away from the ef?cient level of output, the federal government wants to introduce a per-unit subsidy to be paid to the producers. (2) What should be the size of the per-unit subsidy so that at the new market equilibrium (with the tax and the subsidy), the quantity of the commodity traded at the market coincides with the quantity you found in part (1)?