Subsidy Diagram Maker
Subsidy diagrams mirror tax diagrams: supply shifts down by the per-unit subsidy, consumers pay less, producers receive more, and the government cost rectangle spans the entire subsidy times the new quantity. IB questions love asking who gains more, and the answer again comes down to relative elasticities.
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Generate the complete diagram from a one-line prompt, or shift a duplicated supply curve down with drag-and-snap precision.
What the subsidy diagram shows
A per-unit subsidy diagram shows:
- S and S − subsidy: the supply curve shifts vertically down by the subsidy per unit.
- New equilibrium: quantity rises to Qs; consumers pay the lower Pc while producers receive Pp = Pc + subsidy.
- Government cost: the rectangle subsidy × Qs, usually the largest area on the diagram.
- Consumer and producer gains: split of the subsidy benefit determined by relative elasticities.
- Welfare loss: the small triangle beyond Q* where the marginal cost of extra output exceeds its marginal benefit.
How to draw it in IB EconGraph AI
- Prompt the AI with "subsidy for solar panels showing government cost and the price received by producers".
- Keep the vertical gap between the two supply curves constant, it equals the subsidy per unit.
- Mark three prices: original P*, consumer price Pc, and producer price Pp, all with dotted lines.
- Shade the government cost rectangle between Pc and Pp across the new quantity Qs.
- For welfare evaluation, shade the DWL triangle to the right of the original equilibrium.
IA & exam tips
- Renewable energy and agricultural subsidy articles are IA classics, pair this diagram with an opportunity-cost evaluation of the government spending.
- Show explicitly that Pp − Pc equals the subsidy, annotating that vertical distance earns analysis marks.
- For merit goods, combine with the positive externality diagram: the subsidy is the policy that closes the MPB–MSB gap.
Frequently asked questions
Which direction does supply shift for a subsidy?
Down (right) by the subsidy per unit, production is cheaper at every output level. The AI handles the geometry automatically.
How do I show who benefits more?
Compare the consumer gain (P* − Pc) with the producer gain (Pp − P*): the more inelastic side captures more. Draw steep vs flat demand versions to demonstrate.
Can I export this for my IA at high quality?
Yes, SVG, PNG, and JPEG exports are full quality and watermark-free, free forever.
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