Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

The starting market for a product is shown by the demand and supply curves D1 and S1 respectively. A subsidy is then added, shown by the movement of S1 to S2 (+ subsidy). What is the incidence of the subsidy for the consumer and producer?

  • Aconsumer: PN; producer: NA
  • Bconsumer: QR; producer: TR
  • Cconsumer: QT; producer: QB
  • Dconsumer: TR; producer: QR

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