State how the subsidy changes the equilibrium price and quantity in the market. How is this different from the effects of taxation on equilibrium price and quantity?

3. Suppose the government of Country Z introduces a subsidy programme to support the local producers of Good F. In this programme, producers will receive a subsidy of $5 per unit of Good F sold, regardless of the total quantity sold. Figure 4 shows the demand and supply curves before and after subsidy. $5 subsidy per unit - VERTICAL DISTANCE BETWEEN the a supply curve Figure 4. Market of Good F Price ($) SSo (before subsidy) SS1 (after subsidy) Quantity (boxes)