Microeconomics

Learn the toughest concepts covered in Microeconomics with step-by-step video tutorials and practice problems by world-class tutors

Introduction to Taxes and Subsidies

Subsidies

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Sometimes the government gives money out instead of taking it away... It's true, I swear!

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concept

Subsidies

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Problem

A government wants to increase the use of solar panels by offering a $100 subsidy for each solar panel purchased. The addition of this subsidy will:

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Problem

The government wants to help producers of a life-saving machine, so they introduce a $1,000 subsidy per machine produced. Assuming that demand for this machine is inelastic, the subsidy will: