Figure 4-12
Refer to . The supply curve S and the demand curve D1 indicate initial conditions in the market for college textbooks. A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase, shifting the demand curve from D1 to D2. Which of the following is true for this subsidy given the information provided in the exhibit?
a.
The original average selling price of textbooks was $100, and after the subsidy it rises to $120.
b.
$90 represents the net price a buyer must pay for a textbook after taking into account the subsidy payment.
c.
Textbook buyers will receive an actual benefit of $10 from the subsidy, while textbook sellers will receive an actual benefit of $20 from the subsidy.
d.
All of the above are true.
d
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