- Explain why governments provide subsidies, and describe examples of subsidies.
- Draw a diagram to show a subsidy, and analyse the impacts of a subsidy on market outcomes.
- Discuss the consequences of providing a subsidy on the stakeholders in a market, including consumers, producers and the government.
- Plot demand and supply curves for a product from linear functions and then illustrate and/or calculate the effects of the provision of a subsidy on the market (on price, quantity, consumer expenditure, producer revenue, government expenditure, consumer surplus and producer surplus).
We will address the objectives above in class and here is a further practice task to do: