Unsure where to shift the demand to in step one and where to put the equilibriums in step two The following graph shows the demand curve for smart fridges.Suppose the government offers a $1,200 subsidy for each unit of the good the buyer purchases.Adjust the following graph to show the effect of a government subsidy on the market for smart fridges.Price (Hundred Dollars)605448423630241812600 10Demand(Without subsidy)7020 30 40 50 60Quantity (Thousands of fridges)80 90 100Because of the subsidy, at each quantity, the new demand curve lies $Demand,(Without subsidy)higher than the old demand curve. Step 2: Subsidies and the EquilibriumThe following graph shows the demand and supply curves for smart fridges.After the government offers a $1,200 for each unit purchased, the demand curve shifts from D₁ to D₂.On the following graph, use the black point (the cross symbol) to show the equilibrium before the subsidy. Then use the gray point (the star symbol)to show the new equilibrium with the subsidy.Price (Hundred Dollars)6054484236301241812600 102030 40 50 60 70 80Quantity (Thousands of fridges)90 100S₁D2D₁When the purchases of the good are subsidized, the equilibrium price isHEquilibrium, (Without subsidy)Equilibrium with subsidy)?without subsidies.

The concepts of demand and supply are the foundation of microeconomics. Effective demand is simply…

The following graph shows the demand curve for smart fridges. Suppose the government offers a $1,200 subsidy for each unit of the good the buyer purchases. Adjust the following graph to show the effect of a government subsidy on the market for smart fridges. Price (Hundred Dollars) 60 54 48 42 36 30 24 18 12 6 0 0 10 Demand (Without subsidy) 70 20 30 40 50 60 Quantity (Thousands of fridges) 80 90 100 Because of the subsidy, at each quantity, the new demand curve lies $ Demand (Without subsidy) ? higher than the old demand curve.

The following graph shows the demand curve for smart fridges. Suppose the government offers a $1,200 subsidy for each unit of the good the buyer purchases. Adjust the following graph to show the effect of a government subsidy on the market for smart fridges. Price (Hundred Dollars) 60 54 48 42 36 30 24 18 12 6 0 0 10 Demand (Without subsidy) 70 20 30 40 50 60 Quantity (Thousands of fridges) 80 90 100 Because of the subsidy, at each quantity, the new demand curve lies $ Demand (Without subsidy) ? higher than the old demand curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Unsure where to shift the demand to in step one and where to put the equilibriums in step two

The following graph shows the demand curve for smart fridges.
Suppose the government offers a $1,200 subsidy for each unit of the good the buyer purchases.
Adjust the following graph to show the effect of a government subsidy on the market for smart fridges.
Price (Hundred Dollars)
60
54
48
42
36
30
24
18
12
6
0
0 10
Demand
(Without subsidy)
70
20 30 40 50 60
Quantity (Thousands of fridges)
80 90 100
Because of the subsidy, at each quantity, the new demand curve lies $
Demand,
(Without subsidy)
higher than the old demand curve.

Step 2: Subsidies and the Equilibrium
The following graph shows the demand and supply curves for smart fridges.
After the government offers a $1,200 for each unit purchased, the demand curve shifts from D₁ to D₂.
On the following graph, use the black point (the cross symbol) to show the equilibrium before the subsidy. Then use the gray point (the star symbol)
to show the new equilibrium with the subsidy.
Price (Hundred Dollars)
60
54
48
42
36
30
1
24
18
12
6
0
0 10
20
30 40 50 60 70 80
Quantity (Thousands of fridges)
90 100
S₁
D2
D₁
When the purchases of the good are subsidized, the equilibrium price is
H
Equilibrium, (Without subsidy)
Equilibrium with subsidy)
?
without subsidies.

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