00:01
So here we're trading and we should immediately start by drawing a market for steel.
00:05
Now a market for steel is characterized by a domestic supply and a domestic demand.
00:11
We're talking about prices and quantities and i'm going to introduce a world price.
00:16
And we know that the world price has got to be high because we know that the supply has got to be greater than the demand.
00:28
So here, right, you can see there's this difference between, the quantity supplied and the quantity demanded.
00:36
And that difference is equal to exports, right? the price needs to be high because we're exporting steel.
00:42
We are selling it to the rest of the world, which means that we are selling it domestically.
00:48
So now we have a subsidy.
00:50
What does the subsidy do? it increases the supply.
00:53
Right? the subsidy is going to shift the supply curve this way.
00:59
So now you're going to see a greater desire to supply.
01:03
So what is happening here, right? domestic price is unchanged, right? it's unchanged because it remains at the world price...