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Consider a market where supply and demand are given by QXS = -12 + PX and QXd = 78 - 2PX. Suppose the government imposes a price floor of $35, and agrees to purchase any and all units consumers do not buy at the floor price of $35 per unit.
a. Determine the cost to the government of buying firms' unsold units.
b. Compute the lost social welfare (deadweight loss) that stems from the $35 price floor.
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