Chapter 1. Chapter 6

Step 1

Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.

Question

Consider the following supply and demand diagram. In this market, the government subsidizes the production of this good, and the subsidy wedge is indicated.

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Step 2

Question

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Step 3

Question

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

Step 4

Question

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Step 5

Question

The area(s) in Questions 2 through 4 that were answers to more than one of the questions were qVIBv7aCf3i5rq9ptXxqRQ==. (If the answer is areas A and B, enter A+B; if areas A, B and C, enter A+B+C, and so on, in alphabetical order.)

Correct! Areas E+F+G show up in Question 2 as additional consumer surplus from the subsidy, and Areas B+C show up as additional producer surplus from the subsidy. These areas are also part of the total government spending on the subsidy from part d. To review how to determine the gains from trade, please see the section “A Commodity Tax Raises Revenue and Creates a Deadweight Loss (Reduces the Gains from Trade).”
Sorry! Which of the areas in Questions 2 and 3 show up in Question 4? To review how to determine the gains from trade, please see the section “A Commodity Tax Raises Revenue and Creates a Deadweight Loss (Reduces the Gains from Trade).”

Step 6

Question

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