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CJB - It could however be relevant to comment on the degree of price or quantity change arising due to PED or Es.

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CJB - It could however be relevant to comment on the degree of price or quantity change arising due to PED or Es.

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CJB - no need to reference CONSUMER SURPLUS in this question.

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CJB - no need to reference CONSUMER SURPLUS in this question.

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An subsidy is the amount of money paid by a government to a producer so that the price to the customer will be lower than it otherwise would have been

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An indirect tax is one that is levied when goods and services are bought. Eg. VAT

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Removal the subsidy will cause the supply to shift to the left which will cause the price to increase, and quantity to decrease

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A subsidy is a grant to producer that lower their cost of production.

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Removing a subsidy will cause the consumer surplus to decrease which means less of the good will be produced

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From the diagram we can notice that removal tax will shift the supply line to the right, which will cause the price to decrease and quantity increase.

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Removal of tax

supply would increase.

Price would decrease(P to P1)

Quantity would increase(q toq1)

removal of subsidy

Supply would decrease (s to s1)

Price would increase

Quantity would decrease

# data[].attributes.body
From the digram we can see that removal of subsidy will shift the supply diagram to the left, which will cause price to increase and quantity demanded to decrease.

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Removing a subsidy will cause the quantity produced to be decrease where as removing a tax will cause the quantity to increase.

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You can use the letters to help analyse the effects.