Use the figure below to answer the following question(s).
Figure 4-13

-Refer to Figure 4-13.The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots.A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot,shifting the demand curve from D₁ to D₂.Which of the following is true for this subsidy given the information provided in the figure?
A)The original price of a flu shot was $75,and after the subsidy,it rises to $90.
B)$65 represents the net price a buyer must pay for a flu shot after taking into account the subsidy payment.
C)Buyers of flu shots will receive an actual benefit of $10 from the subsidy,while sellers of flu shots will receive an actual benefit of $15 from the subsidy.
D)All of the above are true.

Question

Use the figure below to answer the following question(s).
Figure 4-13
 
-Refer to Figure 4-13.The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots.A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot,shifting the demand curve from D₁ to D₂.Which of the following is true for this subsidy given the information provided in the figure?
A)The original price of a flu shot was $75,and after the subsidy,it rises to $90. 
B)$65 represents the net price a buyer must pay for a flu shot after taking into account the subsidy payment. 
C)Buyers of flu shots will receive an actual benefit of $10 from the subsidy,while sellers of flu shots will receive an actual benefit of $15 from the subsidy. 
D)All of the above are true.

Quizplus · Accepted Answer

The subsidy shifts the demand curve to the right, indicating an increase in demand. The new equilibrium price is $90, and the new equilibrium quantity is 100. The original price was $75, so the subsidy has increased the price by $15. Buyers will pay $65 for a flu shot after taking into account the subsidy payment. Sellers will receive $90 for each flu shot they sell, so they will receive an actual benefit of $15 from the subsidy. Buyers will receive an actual benefit of $10 from the subsidy, which is the difference between the old price and the new price after taking into account the subsidy.

Use the Figure Below to Answer the Following Question(s)