Answer on Microeconomics Question for Mariana
1)consumer surplus increases.
2)total surplus increases.
3)producer surplus increases.
I know the number one is correct but could the combination of number one and 2 still be correct in this case!?
Total surplus may also increase, but this is not important and significant in this case, as the main fact is that even the consumer surplus increase, the deadweight loss will appear, and it is the negative side of the subsidies to producers.
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