Subsidy Cost Calculation Steps:

• Identify new equilibrium quantity after supply shifts right due to subsidy (e.g., 10 units).
• Measure per-unit subsidy as vertical distance between original supply and new supply at new quantity (e.g., $5 per unit).
• Calculate total cost: per-unit subsidy × new quantity produced ($5 × 10 =$50).
• Confirm no deadweight loss affects total government expenditure directly.

Why B is correct:

• Total subsidy cost equals per-unit subsidy amount multiplied by subsidized quantity, per economic definition of producer subsidies.

Why the others are wrong:

• A: Underestimates by ignoring full quantity (e.g., only subsidy on half the units).
• C: Overestimates by doubling the quantity or subsidy rate.
• D: Far too high, possibly confusing with total market value or including unrelated costs.

Final answer: B