Lesson Plan

• Describe the different types of subsidies used as trade protection.
• Explain how a production subsidy shifts the supply curve and affects price, output, and welfare.
• Calculate the government expenditure on a production subsidy given the per‑unit amount and quantity produced.
• Analyse the short‑run and long‑run welfare impacts of subsidies, including dead‑weight loss and potential WTO disputes.
• Evaluate the advantages and disadvantages of various subsidy types for producers and consumers.

• Projector and screen
• Whiteboard and markers
• Printed handout summarising subsidy types and effects
• Worksheet with supply‑demand diagram and calculation tasks
• Calculators for each pair
• Sample exam question on subsidies

Begin with a quick scenario: “A farmer receives extra money for every tonne of wheat produced – how might this change the market?” Connect to students’ prior knowledge of tariffs and quotas, then outline that today they will explore subsidies, their economic effects, and how to tackle exam questions on the topic.

1. Do‑now (5'): Short quiz on different trade restrictions to activate prior knowledge.
2. Teacher input (10'): Define subsidies, present the five main types, and show the supply‑demand diagram of a production subsidy.
3. Guided practice (12'): Students draw the supply shift, label changes in consumer and producer surplus, and calculate the dead‑weight loss.
4. Group activity (15'): Using the wheat example, calculate government expenditure (s × Q) and discuss short‑run vs. long‑run welfare impacts.
5. Check for understanding (8'): Exit ticket – list two welfare effects of subsidies and one potential WTO issue.

Summarise how subsidies alter supply, benefit consumers and producers, but create fiscal costs and dead‑weight loss. Collect the exit tickets and remind students to complete the worksheet for homework, focusing on drawing and interpreting subsidy diagrams.