Hi, I am currently studying Microeconomics and am a little stuck on a question. It is in relation to a 'consumer subsidy' provided by the government, my textbook does not cover it and I have been unsuccessful locating anything online as it all seems to be about a producers subsidy; which our tutor has stressed is not what we are being asked. Thus would like to discuss with anyone further if possible for their views or opinions? Basically as an overview, the govt has decided to fund a $500 rebate (subsidy) to consumers who purchase a rainwater tank (the money is refunded once proof of the purchase is given with the filling out of the appropriate claim paperwork; generally refunded in the form of a credit to their water rates account). I see the subsidy effectively as a gift of money from the government (hence raising disposable income) to be spent exclusively on rain water tanks. What would be the impact on the market for rain water tanks of providing such a subsidy to consumers? I have presumed a shift in the demand curve upwards for the period of the subsidy being paid, causing a new equlibrium price. I was wondering if I should also then discuss if suppliers are impacted(as at this stage I have not changed the supply curve in my diagram), and what happens when the subsidy is discontinued (as they are only funding 500,000 homes), thus the demand will then decrease. Any thoughts would be greatly appreciated. I have about 400 words to answer this question Thanks.