Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 3SQP
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Question
please plot a graph showing the effect of a government subsidy on the market for surgical masks.
Expert Solution
Step 1
The amount given by the government to the producer is known as a subsidy. The main aim of subsidy is to promote the production of a certain commodity by providing an amount of money directly to producers of that commodity.
Whenever the government gives a subsidy to the producer then the supply curve will shift downwards by the amount of subsidy.
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