Use the figure below to answer the following question(s).
Figure 4-12

-Refer to Figure 4-12.The supply curve S and the demand curve D₁ indicate initial conditions in the market for college textbooks.A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase,shifting the demand curve from D₁ to D₂.Which of the following is true for this subsidy given the information provided in the exhibit?
A)The original average selling price of textbooks was $100,and after the subsidy it rises to $120.
B)$90 represents the net price a buyer must pay for a textbook after taking into account the subsidy payment.
C)Textbook buyers will receive an actual benefit of $10 from the subsidy,while textbook sellers will receive an actual benefit of $20 from the subsidy.
D)All of the above are true.

Question

Use the figure below to answer the following question(s).
Figure 4-12
 
-Refer to Figure 4-12.The supply curve S and the demand curve D₁ indicate initial conditions in the market for college textbooks.A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase,shifting the demand curve from D₁ to D₂.Which of the following is true for this subsidy given the information provided in the exhibit?
A)The original average selling price of textbooks was $100,and after the subsidy it rises to $120. 
B)$90 represents the net price a buyer must pay for a textbook after taking into account the subsidy payment. 
C)Textbook buyers will receive an actual benefit of $10 from the subsidy,while textbook sellers will receive an actual benefit of $20 from the subsidy. 
D)All of the above are true.

Quizplus · Accepted Answer

The subsidy shifts the demand curve to the right, increasing the equilibrium quantity and price. The original equilibrium price was $100, and the new equilibrium price is $120. The subsidy reduces the net price paid by buyers to $90 ($120 - $30). Buyers receive a benefit of $10 ($100 - $90), and sellers receive a benefit of $20 ($120 - $100).

Use the Figure Below to Answer the Following Question(s)