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Mar23-10, 06:00 AM
P: 11
I got the demand curve moving one unit, and as it is sloping, the actual rightward movement is only half the subsidy, the rest it taken by the producer with supply moving up the supply line.This is because the increase in demand is above the equilibrium level, therefore the supplier does not wish to produce more, so production prices rise and consumer saves half from original equilibrium price.It is all in the thread, go back to page 1.Are you studying on campus or OUA like me?
Remember, this is a subsidy to the consumer.PAJ Holden and others talk about Subsidy to the producer on youtube.This is is an increase in money income only.Does not do anything for the producer except increase demand.Correct me if I'm wrong.My assignment goes in tomorrow.The elasticity thing has me worried if anyone has thoughts?