Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. A subsidy is a negative tax in which the government gives people money instead of taking itfrom them If the government applied a $1.20 specific subsidy instead of a specific tax in thefigure to the right, what would happen to the equilibrium price and quantity? Use thedemand function and the after subsidy supply function to solve for the new equilibriumvalues What is the incidence of the subsidy on consumers?Prior to the subsidy, demand isand supply isQ=286-20pQ=88.40pThe equilibrium price with the subsidy isp=624(Round your response to two decimal places)The equilibrium quantity with the subsidy isQ 219 4 units(Enter your response as an integer)The incidence of the subsidy on consumers isdecimal places)-3.84 percent (Round your response to twoShow the effect of the subsidy graphically by1.) Using the line drawing tool to draw a new supply curve with the subsidy. Propely labelyour line2) Using the point drawing tool, indicate the new equilibrium. Label your point 'o13:30$ per220Q, million kg per year.

Demand :Demand is when a consumer has the desire to buy something at the price that he is ready to…

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

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

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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Question

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

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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Step 1: Define demand and supply

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Step 2: Determine equilibrium price

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Step 3: Determine the equilibrium quantity and incidence

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Step 4: Determine the incidence of subsidy

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Step 5: Draw the new supply curve

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