Exam questions involving drawing subsidy diagrams are typically found demanding by many students so please remember to revise this area of the course properly and get in lots of practise for this type of government intervention.

If your analysis is accurate, you will frequently be given plenty of scope to critically evaluate the role of subsidies particularly when it comes to addressing different types of market failure. Strong evaluation understands the importance of elasticity in assessing the impact and also considers alternatives to subsidies by the government.

Revision Video: Producer Subsidies