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Unformatted text preview: Subsidies hen the government offers a subsidy it pays When the government offers a subsidy it pays for exchange in a market. Well look at just look at per unit subsidies. s the opposite of per nit taxes It s the opposite of per unit taxes. The price received by sellers is greater than the rice paid by buyers. price paid by buyers. Examples: Green energy Ethanol, Solar, etc. p gy , , 6 Per nit Subsidy A Per Unit Subsidy P S D Q 7 he Bottom Line The Bottom Line Intervention in markets often leads to DWL and unintended consequences. ut recall unregulated markets are only efficient But, recall unregulated markets are only efficient when Buyers and sellers are well informed. Markets are perfectly competitive The supply curve captures all of the costs (and enefits) to production benefits) to production. The demand curve captures all of the benefits (and costs) to consumption. 8...
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This note was uploaded on 06/12/2011 for the course CS 1 taught by Professor Staff during the Fall '08 term at Cornell University (Engineering School).
- Fall '08