macro question 12 ### 1.2. Understanding SubsidiesSuppose that in an attempt to protect its domestic toy industry, Canada's government subsidizes the production or consumption of domestically produced toys by giving each citizen a subsidy card. Each time citizens buy a domestically made toy, they swipe their cards and receive discounts of $8 off the price of a toy.The following graph represents the market for domestically made toys in Canada without any subsidy.Adjust the graph to show the effect of the $8 subsidy.![Graph Image](URL_to_image)The graph presents two lines: - The **Supply** curve (orange line), which slopes upwards.- The **Demand** curve (blue line), which slopes downwards.On the graph:- The horizontal axis represents the **Quantity** of toys (in millions per year).- The vertical axis represents the **Price** of toys (in dollars per toy).The intersection of the supply and demand curves indicates the equilibrium where the quantity demanded equals the quantity supplied.**Instructions:**After the subsidy, the price producers receive is [Blank], and the price paid by consumers is [Blank]. This subsidy program costs Canada's government [Blank].--- ### Explanation of Graph Components:1. **Axes**: - The horizontal axis (x-axis) shows the quantity of toys measured in millions per year. - The vertical axis (y-axis) shows the price of toys per toy in dollars.2. **Curves**: - The **Demand curve** (blue line) slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases. - The **Supply curve** (orange line) slopes upward from left to right, indicating that as the price increases, the quantity supplied increases.3. **Intersection Point**: - The intersection of these two curves represents the market equilibrium without any subsidy, where the supply equals the demand.To observe the effect of the $8 subsidy, there would be a shift in the demand curve or supply curve. The subsidy effectively lowers the price consumers pay by $8, shifting the equilibrium price and quantity.**Fields to be filled:**- **Price producers receive** after the subsidy.- **Price paid by consumers** after the subsidy.- **Cost to Canada's government** for this subsidy program.This educational exercise provides insights into how subsidies impact market equilibrium, price received by producers, price paid by consumers, and the government's cost involved.---Please

When the government introduces a subsidy package that provides $8 subsidy for each unit of the…

12. Understanding subsidies Suppose that in an attempt to protect its domestic toy industry, Canada's govermment subsidizes the production or consumption of domestically produced toys by giving each citizen a subsidy card. Each time citizens buy a domestically made toy, they swipe their cards and receive discounts of $8 off the price of a toy. The following graph represents the market for domestically made toys in Canada without any subsidy. Adjust the graph to show the effect of the $8 subsidy. 24 22 Supply 20 Demand 18 16 Supply 14 12 10 Demand 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of toys per year) After the subsidy, the price producers receive is and the price paid by consumers is This subsidy program costs Canada's government PRICE (Dollars per a toy)

12. Understanding subsidies Suppose that in an attempt to protect its domestic toy industry, Canada's govermment subsidizes the production or consumption of domestically produced toys by giving each citizen a subsidy card. Each time citizens buy a domestically made toy, they swipe their cards and receive discounts of $8 off the price of a toy. The following graph represents the market for domestically made toys in Canada without any subsidy. Adjust the graph to show the effect of the $8 subsidy. 24 22 Supply 20 Demand 18 16 Supply 14 12 10 Demand 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of toys per year) After the subsidy, the price producers receive is and the price paid by consumers is This subsidy program costs Canada's government PRICE (Dollars per a toy)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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