### 7. Steel IndustryConsider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel.**Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph.**![Graph of Steel Industry](https://example.com/steel-graph)**Graph Explanation:**- The graph displays the demand curve (labeled "Demand") and supply curve (labeled "Supply") for steel in the country.- The x-axis represents the quantity of steel (in tons).- The y-axis represents the price of steel (in dollars per ton).- Two horizontal price lines, labeled P₂ and P₁, intersect with the demand and supply curves.- Symbols shown include a triangle ( ### Understanding Export Subsidies and Market Outcomes#### Supply and Demand GraphThe image features a graph plotting the price of steel (in dollars per ton) on the vertical axis and the quantity of steel (in tons) on the horizontal axis. The graph includes the following components:- **Demand Curve (downward sloping)**: Indicates the quantity of steel demanded at various prices.- **Supply Curve (upward sloping)**: Indicates the quantity of steel supplied at various prices.- **World Price Lines**: Two horizontal lines indicating different world prices of steel. - One line shows a lower world price ($P_1$). - Another line shows a higher world price ($P_2$).- **Shaded Areas**: - **Triangle** icon represents areas that may correspond to changes in producer and consumer surplus or other economic indicators. - **Polygon** icon represents areas likely indicating changes in government revenue or loss.### Analysis: Export Subsidy on Steel1. **World Price Representation**: - Because this country exports steel, the world price is represented by $ P_1 $.2. **Government Export Subsidy**: - Suppose that a "pro-trade" government decides to subsidize the export of steel by paying $10 for each ton sold abroad.3. **Market Effects of Export Subsidy**: - With this export subsidy, the price paid by domestic consumers is $ \$ \_\_\_$, and the price received by domestic producers is $ \_\_\_\_ $ per ton. - The effect of these new prices would need further details from the shaded areas (supply, demand, and export lines intersecting) in the graph. - The quantity of steel consumed by domestic consumers $ \_\_\_\_\_\_\_ $, the quantity of steel produced by domestic producers $ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ $, and the quantity of steel exported $ \_\_\_\_\_ \_\_\_\_\_\_\_\_$.4. **True or False Statement**: - With the export subsidy, domestic producers will not sell any steel to domestic consumers. - [Options]: True / False5. **Surpluses and Government Revenue**: - Under the export subsidy, consumer surplus is $ \$ \_\_\_\_\_ $ and producer surplus is \( \$ \_\_\_\

A government policy known as an export subsidy promotes the export of goods while discourages their…

Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply steel in this country. One of the two price lines represents world price of steel. Use the following graph to help you answer the questions below You will not be graded on any changes made to this

Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply steel in this country. One of the two price lines represents world price of steel. Use the following graph to help you answer the questions below You will not be graded on any changes made to this

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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