Explain how the Benefit of a Subsidy can Benefit both the Consumer and Firm, and how it can be Illustrated -What about the Total Cost to the Government?

-Subsidies encourage Increased Production, and for Prices to Fall. This leads to an Extension of Demand -The Benefit of such changes in the Market can be seen in the Demand x Supply Diagram -CONSUMER GAIN is illustrated from the Rectangle made by the Old Price and New Price as the Length, and the Width being NEW Quantity -PRODUCER GAIN is illustrated from the Rectangle made by the New Price and Price Point A. Price Point A is when the Quantity is the SAME as the NEW Quantity Consumed / Supplied. -The Cost to the Government is the CONSUMER GAIN + PRODUCER GAIN