The government pays heat-pump manufacturers a subsidy for every unit supplied.
Which change should be shown in the market for heat pumps?
The demand curve shifts right because the subsidy makes buyers value heat pumps more.
The supply curve shifts right because firms' cost per unit has fallen.
The supply curve shifts left because the subsidy adds to firms' production costs.
The demand curve shifts left because the subsidy makes heat pumps dearer to buyers.
83 exam-style questions on AQA GCSE Economics 1.6 Market failure, covering 1.6.1a Market failure as misallocation of resources, 1.6.1b Government intervention, 1.6.2a Defining externalities, and 1.6.2b Positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.