r/econhw•
CmajAdd9

Price and Quantity Graph of a Subsidy to Suppliers (answers inside, need explanation)

http://i.imgur.com/Wx7QMnb.png

This mainly concerns (b).

  1. Qsub is less than the Qe. Should this be higher since supply will shift right(?) with this subsidy?
  2. How do you calculate those value of the new Q and P? My professor said something about P(Demand under subsidy)-P(supply under subsidy)=Subsidy amount. Solve for one of those and use substitution. Can someone explain how would I do it?

Posted Feb 16, 2017, 11:15 PM UTC

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