Econ Market Intervention 一問

Question

1A) Suppose the govenment subsidises bus companies for the provision of bus services. On a diagram, indicate the govenment subsidy and explain the change in price and quantity transacted.

1B) Under what condition will consumer's subsidy benefit be greater than producers'? Illustrate this with the aid of a diagram.

Answer 1

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it is hard for everyone to ans you on a diagram, i can briefly explain to you by words

A, the subsidy would make the supply curve left shift, so the price will decrease and the Qd would increase

B, under the demand elasticity is smaller than one(Ed<1) , the consumer benefit will greater than producers'

hope that i can help you

if you have any problems, please feel free to find me

Source(s): I got A grade in both HKCEE AND AL and doing a private tutor, so I know the syll a lot.