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In this tutorial, you will learn how to draw a detailed diagram of a subsidy. Start by moving your axis, then find the equilibrium price and quantity. A subsidy reduces costs of production for businesses, shifting the supply curve down. This results in a lower price and higher quantity at a new equilibrium. To fully understand the impact of the subsidy, consider the consumer savings, producer revenue, and government costs at the new equilibrium. It's important to get the basics right before moving on to more advanced concepts.
