1.1. 7 million metric tons, but the price of the imported steel rose to about $448 per metric ton. The supply and demand diagram below shows this situation (along with an estimated no-trade domestic equilibrium at a price of

$625 per metric ton and a quantity of 8.9 million metric tons).

Price

($/metric ton)

$625 448 ~-~"'-'-"'-:='-~r---April 2002 363 7.4 7.9 8.9 9.6 10.2 Domestic supply February 2002 Domestic demand Quantity

(millions of metric tons)

Determine which areas on the graph represent each of the following:

a. The increase in producer surplus gained by U.S. steel producers as a result of the tariff

b. The loss in consumer surplus suffered by U.S. steel consumers as a result of the tariff

c. The revenue earned by the government because of the tariff

d. The gains from trade that are lost

(the deadweight loss) because of the tariff