Question

True or False: With the export subsidy, domestic producers will sell steel to domestic consumers and sell the rest abroad.

Answer 1

The answer to the question of whether the export subsidy would make domestic producers sell steel to domestic consumers and sell the rest abroad is:

• False because the domestic producers would not want to sell at a lesser price than what they would have sold abroad.

What is Export Subsidy?

This refers to the government policy which is meant to discourage export of goods with the aim of regulating the economy which usually leads to the increase in the amount of customer surplus in the market.

With this in mind, we can see that the export subsidy has to do with the increase in domestic price whereby there is a higher cost for exports for producers.

Read more about export subsidy here:
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