subsidy full market impact

Question 1

what is a subsidy and what is it used for

Answer 1

-a subsidy is a money grant bigger to producer by the government to encourage a rise in output

Question 2

effect of subsidy on a graph

Answer 2

-the supply curve will shift down
-the price will fall and the quantity will rise
-gov cost, new equilbirum go up and across
-prod revenue: same as gov cost
-consumer saving: go down to p2
-deadweight welfare loss: go up from new equilibrium and then across