Suppose that in an attempt to protect its domestic toy industry, Canada's government subsidizes the production or consumption of domestically produced toys by giving each citizen a subsidy card. Each time citizens buy a domestically made toy, they swipe their cards and receive discounts of $8 off the price of a toy. The following graph represents the market for domestically made toys in Canada without any subsidy. Adjust the graph to show the effect of the $8 subsidy. 24 22 Supply 20 Demand 18 16 Supply 14 12 10 Demand 2 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of toys per year) After the subsidy, the price producers receive is , and the price paid by consumers is This subsidy program costs Canada's government PRICE (Dollars per a toy)
Suppose that in an attempt to protect its domestic toy industry, Canada's government subsidizes the production or consumption of domestically produced toys by giving each citizen a subsidy card. Each time citizens buy a domestically made toy, they swipe their cards and receive discounts of $8 off the price of a toy. The following graph represents the market for domestically made toys in Canada without any subsidy. Adjust the graph to show the effect of the $8 subsidy. 24 22 Supply 20 Demand 18 16 Supply 14 12 10 Demand 2 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of toys per year) After the subsidy, the price producers receive is , and the price paid by consumers is This subsidy program costs Canada's government PRICE (Dollars per a toy)
Chapter4: Markets In Action
Section: Chapter Questions
Problem 12SQ
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