Subsidies Flashcards
1
Q
A
1300 - 200 = 1100
2
Q
What happens to the supply curve when a subsidy is granted
A
It shifts vertically down
3
Q
What is the equation for the total cost of a subsidy for a government
A
Total cost = Size of subsidy x Quantity sold
4
Q
What is the size of the subsidy
A
The vertical distance between the two supply curves
5
Q
What is the total cost of the subsidy to the government
A
6
Q
What do the boxes represent
A
Top one - producer benefit
Bottom one - consumer benefit
7
Q
What is a subsidy
A
A grant from the government to a firm to increase the supply of a good
