Key Diagrams - Producer Subsidies (Cost and Revenue Analysis)
- A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 23 Apr 2022
In this video, we use cost and revenue curve analysis to work through the effects on price, output and profit of an input subsidy to producers.
Read the question carefully! If it says ”using a supply and demand diagram” then you need to use the Year 12 analysis as the basis for your answer. Otherwise consider using cost and revenue curves since this shows that lower costs can lead to higher profits even if the subsidised firm lowers their prices in the market.