Economics (AS & A Level) · May / June 2021 · Paper 11 · Question 18

A government introduces a subsidy to encourage the purchase of electric cars. [Diagram: price-quantity diagram with supply before subsidy, supply after subsidy, demand curves, labelled points O, P, Q, R, S, T, U, V, W] Which area on the diagram represents the cost to the government?

1. AOPUV
2. BPQTU
3. CPRSU
4. DQRST

As printed in the paper