The figure shows a country’s domestic supply and demand curves for a good, as well as the world price, Pw, for the good that it faces, as a small country, on the world market. Initially, the country is exporting X1 units of that good at that price. Suppose that producers in this industry lobby policy makers to provide them with some sort of assistance to help them export even more. Policy makers are considering an export subsidy.What area represents the benefit to the producers from this subsidy?Group of answer choicesb+c+da+b+cc+da+b This diagram represents a supply and demand model, likely related to international trade, as indicated by the notations for world price (PW) and a tariff (s).### Axes:- **Vertical Axis (Price):** Represents the price of the commodity.- **Horizontal Axis (Quantity):** Represents the quantity of the commodity.### Lines:- **D (Demand Curve):** Slopes downwards, indicating that as price decreases, the quantity demanded increases.- **S¹ (Supply Curve with Tariff):** Slopes upwards, representing that as price increases, the quantity supplied increases. The superscript "1" may indicate considerations of a tariff.### Price Levels:- **PW:** Represents the world price without tariffs.- **PW+s:** Represents the world price plus a tariff.### Quantities:- **Q¹d and Q²d:** Quantities demanded at different price levels.- **Q¹s and Q²s:** Quantities supplied at different price levels.### Areas:- **a, b, c, d:** These sections refer to different economic effects, potentially areas of consumer surplus, producer surplus, or government tariff revenue.- **X¹, X², X³:** These denote changes in quantities or the shifts in economic welfare due to the tariff or policy change.### Explanation:The diagram illustrates the effects of a tariff. When the price is at PW, the quantity demanded and supplied are at Q²d and Q¹s, respectively. With a tariff, the price increases to PW+s, the demand decreases to Q¹d, and the supply increases to Q²s. The areas marked a, b, c, and d reflect the changes in economic welfare due to the imposition of the tariff, such as loss of consumer surplus or gain in government revenue.

Producer surplus is the area above the supply curve and below the price. It is the difference between the given price and price consumer is willing to receive. Before subsidy, economy is trading at world price Pw but after subsidy price increases from Pw to Pw+s which leads to an additional benefit for producers as producer surplus increases by the area a+ b+ c. Hence, the benefit to producers from this subsidy is a+b+c. Therefore, option (b) is the correct option.