Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

America manufactures 90 million tons of steel annually but domestic demand is 120 million tons.The global market price (world price) for steel is $500/ton, at

America manufactures 90 million tons of steel annually but domestic demand is 120 million tons.The global market price (world price) for steel is $500/ton, at which America imports the 30 million tons it does not produce domestically.Domestic demand is not constrained by domestic supply as a result.

If America imposes a 25% tariff on imports (price rises to $625/ton), domestic production rises to 100 million tons while the quantity demanded falls to 112 million tons.

Calculate the change in surplus for:

a)consumers (1)

b)domestic producers (1)

c)the government (1)

d)Calculate the deadweight loss to society resulting from the tariff (2)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Microeconomics and Its Application

Authors: walter nicholson, christopher snyder

11th edition

9781111784300, 324599102, 1111784302, 978-0324599107

More Books

Students also viewed these Economics questions