Per-unit subsidy

1. Per-unit subsidy (從量津貼) P ($) S1 S2 Per-unit subsidy Q

2. P1 P2 Q1 Q2 Incidence of per unit subsidy P ($) S1 S2 R Total Amount of Subsidy Producer’s benefit Per-unit subsidy Consumer’s benefit D Q

3. P1 P2 Q1 Q2 Incidence of per unit subsidy (supply is more elastic than demand) P ($) S1 S2 Total Amount of Subsidy Producer’s benefit Per-unit subsidy Consumer’s benefit D Q

4. P1 P2 Q1 Q2 Incidence of per unit subsidy (demand is more elastic than supply) P ($) S1 Total Amount of Subsidy Producer’s benefit S2 Per-unit subsidy Consumer’s benefit D Q

5. Under what conditions will consumers get the amount of subsidy? • 在甚麼情況下，消費者可以得到整部份的津貼?

7. When the demand is perfectly inelastic (|Ed|=0),… (e.g., medicine for curing cancer (治療癌症藥物)) D P ($) S1 P1=50 S2 Total amount of subsidy Consumer’s benefit Per-unit subsidy P2=40 Q Q =10

8. When the supply is perfectly elastic (|Es|=∞),… P ($) P1 S1 Total Amount of Subsidy Consumer’s benefit Per-unit subsidy P2 S2 D Q Q1 Q2

9. Under what conditions will producers get the amount of subsidy? • 在甚麼情況下，生產者可以得到整部份的津貼?

10. When the demand is perfectly elastic (|Ed|=∞),… P ($) S1 S2 Total amount of subsidy Producer’s benefit Per-unit subsidy P1 D Q Q1 Q2

11. When the supply is perfectly inelastic (|Es|=0),… (e.g., tunnel, stadium) P S1 S2 Q 40,000 50,000

12. When the supply is perfectly inelastic (|Es|=0),… S1 =S2 P ($) Total Amount of Subsidy Producer’s benefit Per-unit subsidy P1 D Q Q1