<p>The confusion stems from the fact that the price is also a $\frac{\$}{units}$</p>

CC BY-SA 3.0
2017-02-01T20:55:45.253Z
2017-02-01T20:55:45.253Z
Pekisch
<p>I am giving my first steps on microeconomics and I can't fully understand why by applying a <strong>per unit subsidy</strong>, the supply curve is shifted by a fixed amount. In wikipedia's words:</p>

<blockquote>
  <p>Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the <strong>per unit subsidy</strong></p>
</blockquote>

<p>But let's say that my supply curve is given by 
$$ Q_s = -200 +3 \cdot P $$ 
If a <strong>per unit</strong> subsidy is applied, the new supply curve is now given by:
$$ Q_s = -200 +3 \cdot (P+50) $$ 
But if the unit of the subsidy is $[\frac{\$}{units}] $ the units of the equation don't match: 
$$ Q_s [units] = -200[units] +3[\frac{units}{\$}] \cdot (P[\$]+50[\frac{\$}{units}]) $$ 
So shouldn't a <strong>per unit</strong> subsidy change the slope of the supply curve rather than shifting it?</p>

<microeconomics><supply-and-demand>
Regarding the units of the shift produced by subsidies on supply curve
diegobatt
# Regarding the units of the shift produced by subsidies on supply curve

(Asked by: username_0 on 2017-02-01)

I am giving my first steps on microeconomics and I can't fully understand why by applying a **per unit subsidy**, the supply curve is shifted by a fixed amount. In wikipedia's words:

> Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the **per unit subsidy**

But let's say that my supply curve is given by
$$ Q\_s = -200 +3 \cdot P $$
If a **per unit** subsidy is applied, the new supply curve is now given by:
$$ Q\_s = -200 +3 \cdot (P+50) $$
But if the unit of the subsidy is $[\frac{\$}{units}] $ the units of the equation don't match:
$$ Q\_s [units] = -200[units] +3[\frac{units}{\$}] \cdot (P[\$]+50[\frac{\$}{units}]) $$
So shouldn't a **per unit** subsidy change the slope of the supply curve rather than shifting it?

**Tags:** microeconomics, supply-and-demand

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## 1 answers

### Answer by username_1 on 2017-02-01. Score: -3 | Accepted answer

The confusion stems from the fact that the price is also a $\frac{\$}{units}$


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