Homework Answers
A subsidy per unit of output causes a rightward shift of market supply curve . Hence , equilibrium price falls . $6 subsidy is shown below :
After the subsidy producer receive is = $ 9 , and the price paid by consumers is = $ 3 , This subsidy program costs Canada government = $120 million ( 20 million of units sold per year post subsidy , total subsidy = $6 * 20 = $120 million )
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