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The following graph shows the domestic market for steel in the United States, where Sp is the domestic supply curve, and Dp is the
The following graph shows the domestic market for steel in the United States, where Sp is the domestic supply curve, and Dp is the domestic demand curve. Assume the United States is considered a large nation, meaning that changes in the quantity of its imports due to a tariff influence the world price of steel. Under free trade, the United States faced a total supply schedule of Spaw, which shows the quantity of steel that both domestic and foreign producers together offer domestic consumers. In this case, the free-trade equilibrium (black plus) occurs at a price of $280 per ton of steel and a quantity of 8 million tons. At this price, the United States imports 6 million tons of steel. Suppose the U.S. government imposes a $100-per-ton tanff on steel imports. On the following graph, use the tan line (rectangle symbol) to draw the new total supply schedule including the tariff (Spewer). Then use the grey point (star symbol) to indicate the new market equilibrium price and quantity as a result of the tariff PRICE (Delas per ton) 560 520 Do 440 400 x6 320 340 1 Equibrium Under Tant A A Domestic Revenue Elect ?
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