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wage (b) Mark the graph with the wage W paid by firms after the subsidy goes into effect. Labor Supply 16 (c) Mark the graph with the wage W' received by 14 workers after the subsidy goes into effect. 12 (d) After the subsidy, firms pay guards $ per 10 hour and guards receive per hour. 00 (e) Before the subsidy guards work hours Labor Demand per week. After the subsidy they work hours per week. (f) Total earnings by all janitors is |$ after 20 40 60 80 100 120 140 160 180 Q (thousand hours) the subsidy. (a) Mark the graph with the hours worked Q after (g) The taxpayer cost of the subsidy is |$ the subsidy goes into effect. Economics 200 S2021: Prof. Lisa M. George Exercise 5: Subsidies, Tariffs and Price Floors Name: Problem 5.3. The graph below depicts the monthly market for electric cars without subsidy. The government introduces a subsidy for electric vehicles to encourage adoption. They subsidy is implemented by paying car makers $20,000 per car. ($/car) thousand cars per month. 60000 50000 40000 30000 20000 X (c) In the subsidy equilibrium, drivers of electric cars pay $ per car, which is $ less than without the subsidy to sellers. Circle this price on the vertical axis. (d) In the subsidy equilibrium, sellers pocket (in- cluding the subsidy) $ per car, which is $ more than without the subsidy. Mark 10000 this price on the vertical axis. Cars (e) The government spends $ per month on (ths. cars/month) the subsidy program. Illustrate this expenditure in the graph. (a) Illustrate how the subsidy affects the demand for or supply of electric cars. Mark the new equilib (f) The deadweight loss from over-production and rium point with Es- -consumption of electric cars is $ per (b) The subsidy lifts sales of electric cars month. Show this loss in the graph. Problem 5.4. The graph below depicts the market for white burgundy wine. Domestic supply and demand are shown in the figure. The world price for this wine is $40 per bottle. ($/bottle) Domestic Supply (c) The US imposes a tariff of $10 per bottle. Mark 100 the graph with the number of bottles consumed 90 in the US each week, produced in the US each 80 week, and imported into the US each week with 70 the tariff in place. 60 50 (d) The tariff increases / decreases domestic pro- 40 pWorld duction by and increases / decreases 30 20 domestic consumption by 10 Demand (e) Shade the area on the graph representing the to- 10 20 30 40 50 60 70 80 90 100 Q ( ths . bottles /week ) tal revenue raised by the tariff. (a) Mark the graph with the number of bottles con- sumed in the US each week, produced in the US (f) The revenue raised by the tariff is the each week, and imported into the US each week loss to US consumers is and the gain to under free trade. domestic producers is (b) Under free trade, the number of bottles consumed in the US each week is the number pro- duced in the US each week is and the number imported each week is O <