The federal government provides a number of subsidies to the oil and gas industries. In defence of the subsidies, a spokesman for the industry observed “some alleged subsidies don’t even go to the industry.” U s e a supply and demand model to analyze the incidence of a subsidy to low - income consumers of oil and gas, and use your analysis to evaluate t he claim that the subsidies to low-income consumers do not benefit suppliers.

[Note: To construct the model, note that a subsidy is just a negative tax. Buyers in this model are low - income consumers. ]