This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

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Brief description: If the government put a subsidy on a good, this will shift the supply curve downwards by the amount of the subsidy (S1 to S2 in the diagram).

Detailed description: The subsidy will increase output to Q2 and reduce the price to P2. The amount per unit of the subsidy is given by the vertical distance between the two supply curves and the total cost of the subsidy is given by the shaded area.