Wize University Microeconomics Textbook > Efficiency

CS and PS with Subsidies

CS and PS with Subsidies

Consumer surplus is above the consumer's price ($48) but below the demand which is ________
Producer surplus is below the producer's price ($52) but above the supply which is ________
Cost to government is the subsidy multiplied by the new quantity which is ________
DWL is the triangle between the old equilibrium quantity and the new quantity which is ________

Practice: CS, PS, DWL with Subsidy

The demand for pencils in Pennsylvania is downward sloping and the supply is upward sloping. If the government decides to remove the existing subsidies on pencils, which of the following would occur?

Consumer Surplus increases, but Producer Surplus decreases. Total Surplus increases

Consumer Surplus decreases, but Producer Surplus increases. Total Surplus increases

Consumer Surplus and Producer Surplus decrease, so Total Surplus decreases

Consumer Surplus and Producer Surplus decrease, but Total Surplus increases

I don't know

CS and PS with Subsidies

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