Figure: Demand and Supply with Subsidy (Figure: Supply and Demand with Subsidy) Refer to the figure.Suppose a subsidy allows sellers to receive their product at theprice of $8 with a quantity of 400 units. What is the dollaramount of the subsidy per unit of the good?

Question

Figure: Demand and Supply with Subsidy  (Figure: Supply and Demand with Subsidy) Refer to the figure.Suppose a subsidy allows sellers to receive their product at theprice of $8 with a quantity of 400 units. What is the dollaramount of the subsidy per unit of the good?

Quizplus · Accepted Answer

The subsidy allows sellers to receive the product at a lower cost of $8 instead of the original $10. Therefore, the dollar amount of subsidy per unit of the good is the difference between the original cost and the subsidized cost, which is $2. Therefore, the answer is C.