Explain how subsidies affect the price of domestic and export products. FIGURE 5.4 Trade and Welfare Effects of Subsidies Price (Dollars) 430 425 400 (a) Domestic Production Subsidy Su.s.o B 2 9 Su.s.1 Subsidy 7 14 Steel (Millions of Tons) Sw DUSA 5 Price (Dollars) 2 (b) Export Subsidy A Su.s. World Price + Subsidy World Price 4 6 8
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Explain how subsidies affect the price of domestic and export products.
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