a subsidy is the opposite of a tax. with a $0.50 tax on the buyers of ice-cream cones, the government collects $0.50 for each cone purchased; with a $0.50 subsidy for the buyers of ice cream cones, the government pays buyers $0.50 for each cone purchased. show the effect of a $0.50 per cone subsidy on the demand curve for ice-cream cones, the effective price paid by sellers, and the quantity of cones sold. do consumers gain or lose from this policy? do producers gain or lose? does the government gain or lose?

In order to complete this work, we must take into account how the government's decision to provide consumers with a $0.50 subsidy for each ice cream cone they buy will affect the cost and number of cones that are offered for sale at the ice cream market.

Step 2;

The government's decision to provide consumers with a $0.50 subsidy for each ice cream cone they buy encourages consumers to buy more ice cream, which causes the demand to rise (from D 1D 1 to D 2D 2) while the supply stays the same.

Under those circumstances, sales volume rises over the equilibrium level (from $100 to $120 for ice cream cones).

Additionally, the price paid to sellers rises from $3 to $3.3 per cone, exceeding the equilibrium price.

The price paid by consumers is, however, $0.50 less than the amount sellers receive since they receive a government subsidy of $0.50 per cone. Therefore, the cost to consumers is $2.8.

The graph below shows the current state of the market. (see attached file)

For more questions like Subsidy click the link below:

https://brainly.com/question/4256028

#SPJ4