Explain how does export subsidy affect the domestic price

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Consider a small country that exports steel. Suppose that a "pro-trade" government deicdes to subsidize the export of stell by paying a certain amount for each ton sold abroad. How does this export subsidy affect the domestic price of steel, the quantity of steel produced, the quantity of stell consumed, and the quantity of steel exported? how does it affect consumer surplus, producer suprlus, government revenue, and total surplus? is it a good policy form the standpoint of ecomonic efficency?

Reference no: EM1360582

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