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A-Level Economics · Subsidy diagram question

Which area is PRODUCER SURPLUS AFTER the subsidy?

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The diagram

The answer

The triangle O A F. Above the ORIGINAL supply curve, below the £7 producers now receive, out to point F. Producers receive £7 per unit (price + subsidy) on 7 units: PS = area OAF, measured off the ORIGINAL S — their true costs didn't change.

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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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