The subsidy per unit is $4. Without the subsidy, the price of good B would be $14. The question doesn't ask this directly, but the total value of the subsidy is $16,000.
CS in A falls by $18,000; CS in B increases by $15,200; DWL in A is $2000; DWL in B is $800; total DWL is $2,800.
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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 10/02/2006
