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As with taxes the total subsidy per unit is the vertical distance between the supply curves, but since it has the effect of lowering costs of production the subsidy will shift supply to the right to S + subsidy.  This has the effect of increasing output to Q2 and lowering the price to Pc.  The cost taxpayers (paid by the government) is equal to the total subsidy per unit (ab) multiplied by the quantity of the good consumed (Q2) this gives the shaded area PcPfab.




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