The incidence of the subsidy on consumers is decimal places) Show the effect of the subsidy graphically by 1) Using the line drawing tool to draw a new supply curve with the subsidy Propely label your line 2) Using the point drawing tool, indicate the new equilibrium. Label your point o

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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A subsidy is a negative tax in which the government gives people money instead of taking it
from them If the government applied a $1.20 specific subsidy instead of a specific tax in the
figure to the right, what would happen to the equilibrium price and quantity? Use the
demand function and the after subsidy supply function to solve for the new equilibrium
values What is the incidence of the subsidy on consumers?
Prior to the subsidy, demand is
and supply is
Q=286-20p
Q=88.40p
The equilibrium price with the subsidy is
p=624
(Round your response to two decimal places)
The equilibrium quantity with the subsidy is
Q 219 4 units
(Enter your response as an integer)
The incidence of the subsidy on consumers is
decimal places)
-3.84 percent (Round your response to two
Show the effect of the subsidy graphically by
1.) Using the line drawing tool to draw a new supply curve with the subsidy. Propely label
your line
2) Using the point drawing tool, indicate the new equilibrium. Label your point 'o
13:30
$ per
220
Q, million kg per year.
Transcribed Image Text:A subsidy is a negative tax in which the government gives people money instead of taking it from them If the government applied a $1.20 specific subsidy instead of a specific tax in the figure to the right, what would happen to the equilibrium price and quantity? Use the demand function and the after subsidy supply function to solve for the new equilibrium values What is the incidence of the subsidy on consumers? Prior to the subsidy, demand is and supply is Q=286-20p Q=88.40p The equilibrium price with the subsidy is p=624 (Round your response to two decimal places) The equilibrium quantity with the subsidy is Q 219 4 units (Enter your response as an integer) The incidence of the subsidy on consumers is decimal places) -3.84 percent (Round your response to two Show the effect of the subsidy graphically by 1.) Using the line drawing tool to draw a new supply curve with the subsidy. Propely label your line 2) Using the point drawing tool, indicate the new equilibrium. Label your point 'o 13:30 $ per 220 Q, million kg per year.
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