Suppose the government has decided to subsidize production in the hypothetical market depicted in the accompanying graph. What effect will this subsidy have on the equiLiBrium price and quantity in the market?
1) The equiLiBrium price will increase and the equiLiBrium quantity will decrease.
2) The equiLiBrium price will decrease and the equiLiBrium quantity will increase.
3) The equiLiBrium price and quantity will remain unchanged.
4) The effect on the equiLiBrium price and quantity cannot be determined based on the information given.