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here we go in this lesson we're going to discuss the final tool of protectionism that a government may choose to employ in order to protect domestic producers from cheaper foreign competition if you've been following the lessons on protectionism then you've already seen the video on protectionist tariffs and the video on protectionist quotas in this lesson we're going to look at protectionist subsidies we're going to use the same example as we have in our previous two videos on protectionism we're going to look at the market for apples in South Korea which we have here on the right assume as we have in previous lessons that the world price of apples PW is lower than the domestic equilibrium price of apples in South Korea which would be found at the intersection of SK and DK the world Supply is perfectly elastic because Apple consumers in Korea can buy as many apples as they want at the world price without causing the world price of apples to rise due to the fact that Korea has a comparative disadvantage in apple production Korea will import a quantity of apples from qsk to qdk under free trade assume now that the Korean government wishes to protect Korean Apple Farmers with the use of a subsidy let's go over to our definition here and Define what a protectionist subsidy is before we look at the graphical implications of one a subsidy you may have learned the definition of in your microeconomics unit it's simply a payment from the government to producers for each unit of the good produced that's a per unit subsidy a protectionist subsidy is one that is intended to reduce the quantity of imports and allow domestic producers to sell more of their product and earn higher revenues in other words the intent of a protectionist subsidy is essentially the same as any other form of protectionism to increase the sales and the revenues of domestic firms at the expense of foreign producers looking at our graph on the right we can illustrate the effects of a protectionist subsidy in the market for apples in South Korea you might have learned in microeconomics that a subsidy is a determinant of supply for a good and a subsidy lowers the marginal cost of producing a good for the firms that receive it in microeconomics we learned that the supply curve represents the marginal cost the cost of each additional Apple in South Korea in this case a subsidy reduces the marginal cost to Apple Growers in South Korea and therefore shifts the marginal cost curve down or you could say shifts the supply curve to the right the impact of a subsidy for Apple growers in South Korea would be as follows I label this curve s k with the subsidy the amount of the subsidy per Apple can be understood as the vertical distance between the two Supply curves since the vertical axis on a graph is price represented by dollar or South Korean W in this case the perun subsidy lowers the cost of apples in South Korea by the vertical distance between the two curves shifts the supply curve...