# 12. Understanding subsidies Suppose that in an attempt to protect its domestic clothing industry,… 1 answer below »

Understanding subsidies Suppose that in an attempt to protect its domestic clothing industry, New Zealands government subsidizes the production or consumption of domestically produced clothes by giving each citizen a subsidy card. Each time citizens buy domestically made clothes, they swipe their cards and receive discounts of \$6 off the price of a unit of clothes. 0 The following graph represents the market for domestically made clothes in New Zealand without any subsidy. Adjust the graph to show the effect of the \$6 subsidy. 16 T Supply Demand 14 12t Supply O 10 4 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of units of clothes per year) After the subsidy, the price producers receive is , and the price paid by consumers is . This subsidy program costs New Zealands government ” src=”https://files.transtutors.com/cdn/questions/transtutors006/images/transtutors006_d71c3dbc-d2dc-4565-a290-effa5968464d.png”>

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12. Understanding subsidies Suppose that in an attempt to protect its domestic clothing industry,… 1 answer below »
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12. Understanding subsidies Suppose that in an attempt to protect its domestic clothing industry, New Zealand’s government subsidizes the production or consumption of domestically produced clothes by giving each citizen a subsidy card. Each time citizens buy domestically made clothes, they swipe their cards and receive discounts of \$6 off the price of a unit of clothes. 0 The following graph represents the market for domestically made clothes in New Zealand without any subsidy. Adjust the graph to show the effect of the \$6 subsidy. 16 T Supply Demand 14 12t Supply O 10 4 0 6 12 18 24 30 36 42 48 54 60 QUANTITY (Millions of units of clothes per year) After the subsidy, the price producers receive is , and the price paid by consumers is . This subsidy program costs New Zealand’s government