-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the total cost to the government of the subsidy
A)$6,000.
B)$8,000.
C)$10,000.
D)$14,000.
E)$18,000.

Question

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the total cost to the government of the subsidy
A)$6,000. 
B)$8,000. 
C)$10,000. 
D)$14,000. 
E)$18,000.

Quizplus · Accepted Answer

The total cost of the subsidy to the government would be the subsidy amount per unit multiplied by the number of units bought due to the subsidy. If the subsidy is equal to the external benefits, it shifts the demand curve to the right, leading to an increase in quantity. The area representing the total cost of the subsidy is the subsidy per unit times the new quantity bought, which, based on the information provided and typical subsidy analysis, would equal $18,000.

-Refer to the Above Graph to Answer This Question