To reduce the use of fossil fuel, one government decides to subsidise the suppliers of electric vehicles with a subsidy of $2 for every car they sell. Prior to the subsidy, the supply curve for electric cars is given by: p = 12 + Q. The demand curve is given by the following: p = 50 – Q.
8. After the subsidy is imposed, the new supply curve is:
a) p = 52 - Q
b) p = 14 + Q
c) None of the other answers is correct.
d) p = 48 - Q
e) p = 10 + Q
9. After the subsidy is imposed, how much is the total cost of the subsidy to the government?
a) 36
b) 18
c) 40
d) None of the other answers is correct.
e) 42