The demand for bicycles is given by P = 2000 - 0.04Q and their supply is P = 120 + 0.01Q . You have found the equillibrium price and quantity in this market for bicycles. Now,let us say the people in government decide that they want to encourage people to ride bicycles and so they announce that will subsidize bike purchases - for every bike someone buys they ( the government ) pay $100 ( if you buy a bicycle, you send a copy of your receipt to your city council and a week later you receive a $100 cheque ) .