Illustrate the deadweight loss

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The U.S. supply and demand curves for cars cross at $10,000, but U.S. carmakers can sell any quantity of cars to foreigners at a price of $15,000. One day the U.S. government announces that it will pay manufacturers a subsidy of $2000 for every car sold to an American. (There is no subsidy on cars sold to foreigners.) Illustrate the gains and losses to all relevant groups, and illustrate the deadweight loss. (If necessary, assume that once a car is bought, it cannot be resold.)

Reference no: EM13984733

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