Here's the market diagram. The subsidy increases CS by A+B, costs the government A+B+C and has no effect on PS. It thus creates DWL equal to C.
Site Index |
Zoom |
Admin
URL: https://wilcoxen.maxwell.insightworks.com/pages/4017.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 10/07/2014
