Answer to Question #258578 in Microeconomics for Sonu

Question

suppose that the government gives rose produces a specific subsidy of s=11 cper stem shows that the original demand and supply curve what is the effect of the subsidy on the equilibrium prices and quantity,Consumer surplus,producer surplus ,WELFARE AND DEAD WEIGHT LOSS?

Answer 1

In this case, the equilibrium price will rise trying to meet the demand for the product. However, the equilibrium quantity cannot be determined in this case. Consumer surplus will reduce since other expenses may be shifted to lower-priced alternative goods for the respective product.