Subsidies shift demand for consumer benefits

Steps:

• Recall that a subsidy reduces costs, affecting either supply or demand based on recipient.
• For consumer subsidies, buyers pay less, increasing quantity demanded at each price.
• This causes the demand curve to shift rightward, often labeled as D2 in diagrams.
• Confirm the shift matches the option describing demand movement to D2.

Why D is correct:

• Consumer subsidies effectively raise willingness to pay, shifting demand right per the law of demand.

Why the others are wrong:

• A: D1 likely shows a leftward demand shift, which occurs with taxes, not subsidies.
• B: S1 indicates a leftward supply shift, opposite of subsidy effects on producers.
• C: S2 shows rightward supply shift, correct for producer subsidies but not consumer ones.

Final answer: D