Illustrate consumer surplus before and after price subsidy


Suppose that Micronesia is a small country that imports milk (thus, it takes the world price of milk as given). Illustrate with the help of a diagram the effects of a price subsidy of $x for milk. On your diagram show the consumer surplus before and after the price subsidy as well as the deadweight loss resulting from the price subsidy.

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Microeconomics: Illustrate consumer surplus before and after price subsidy
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