Find tax revenue, Microeconomics

The US government decides to subsidize solar panels. For each unit sold, the government pays $T to the buyer. Using a graph, show how this subsidy affects i) consumer surplus, ii) producer surplus, iii) tax revenue and iv) total surplus. To get credit, please label the axis, all the lines and mark with letters the relevant areas.

Does the subsidy lead to deadweight loss? If it does, show the deadweight loss in the graph and explain using your words why a deadweight loss might arise. If the subsidy does not lead to deadweight loss, explain why.

Posted Date: 4/1/2013 4:08:55 AM | Location : United States

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