The diagram illustrates the market’s equilibrium price, P1, and the quantity bought and sold, Q1, before a subsidy is introduced. What shows the producer incidence (benefit) once the subsidy has been introduced, and what is the government expenditure on the subsidy?
- Aproducer incidence (benefit) P1P2NM; government expenditure P1P2NM
- Bproducer incidence (benefit) P1P2NM; government expenditure P3P2NL
- Cproducer incidence (benefit) P1P3LM; government expenditure P1P3LM
- Dproducer incidence (benefit) P1P3LM; government expenditure P3P2NL