Export Subsidy, Small Country, Exportable Product
(Figure 10.4)

As in the small-country case, the export subsidy has increased domestic production and exports of pipes. Producer surplus increases by area e + f + g. Press the "Producer Surplus" button to show the amount by which producer surplus increases. Consumer surplus falls by area e + f. Press the "Consumer Surplus" button to show the amount by which consumer surplus decreases. The export subsidy costs the government area f + g + h + i + j + k + l + m in Panel A (or area f + g + h + n + r + t + u in Panel B). Press the "Government Cost" button to show the cost of the subsidy to the government.
Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.