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A-Level Economics · Subsidy diagram question

A £4-per-unit subsidy shifts S down to S + subsidy. Which point on the price axis do CONSUMERS now pay?

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The diagram

The answer

Point C. Where S + subsidy crosses D (point E): price falls to £3, quantity extends to 7. Consumers pay where the NEW supply curve crosses D — point E, price C = £3. Chain: subsidy → supply shifts right → price falls → extension of demand.

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This is one of 5 questions on the subsidy diagram — every corner lettered, every wrong answer diagnosed.

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