Question

Concept: Subsidy Assume the figure to the right illustrates the market for orange juice. Suppose the government begins providing orange juice producers a $0.60 per pound subsidy. What will be the effects of this subsidy on the market for orange juice? 1.) Using the point drawing tool, indicate the pre-subsidy competitive market equilibrium. Label this point 'e, 2.) Using the line drawing tool, draw a new supply curve reflecting the subsidy. Label this line 'Supplys' 3.) Using the point drawing tool, indicate the market price and quantity with the subsidy. Label this point 'ex' Carefully follow the instructions above and only draw the required objects. Click the graph, choose a tool in the palette and follow the instructions to create your grap All parts showing Clear Previous

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Answer 1

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2.90 supply 2.00 1.80 (.60 ei Price (8 per sound) Supply Curre, (After sub. ) 1.40 Supply S' eg 100 0.80 0.60 o. Y of 0.90 0.20 Demand lo 3 5 7 9 10 Quantity Before Subcidy Equilibrium Price = $1.60 Equilibeure Quantity: 2 0 After subidy Equilibrium Price = & 11. 20 6 Quantity = 4 1