Suppose that the supply curve for solar panels is as shown in the diagram: pg85

The government decides that it would like to increase the quantity of solar panels in use, so it offers a $20 subsidy per panel to producers. Draw the new supply curve. As a hint, remember our analysis of how a tax affects supply, as shown in Figure 3.12, and bear in mind that a subsidy can be thought of as a “negative tax.”

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Price $80 70 60 50 40 30 20 10 20 40 60 80 100 Quantity