Question

Suppose the Trump administration was to impose import quotas on foreign steel which effectively reduces the...

Suppose the Trump administration was to impose import quotas on foreign steel which effectively reduces the amount of steel that foreign producers can sell in the U.S.  

  1. On a supply/demand graph show how this policy would affect the domestic steel market.
  2. On a separate supply/demand graph show how this policy would affect the domestic automobile market.

Homework Answers

Answer #1

Let us suppose that S and D are the domestic supply and demand curves. P1 is the world price line. With the free trade, the domestic producers produced till point B.

Now, the government imposes a quota of Q1Q2. Due to this, the price gets raised. The quota increases the doemstic production from point B to point A.

Now, the quota leads to the rise in price of steel. Steel is the major input used in automobiles. When the price of inputs used in automobiles will rise, it will lead to lesser supply at the existing prices. Due to this, the supply curve shifts backwards. The prices rise and the equilibrium quantity decreases.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
President Trump announced today, May 31, 2018, that his administration would impose tariff on Steel &...
President Trump announced today, May 31, 2018, that his administration would impose tariff on Steel & Aluminum products entering the US from Mexico, Canada, China and the European Union (EU). What are tariffs? Why are they imposed? If the referenced countries retaliate, how would it affect US consumers, companies and the US economy in general? In answering these questions and, to receive full credit, please view the Youtube Videos on tariffs and reference a couple of them
Please I need the correct answers since I'm doing a test. Please!! Please!! 1. Suppose Czech...
Please I need the correct answers since I'm doing a test. Please!! Please!! 1. Suppose Czech businessmen began purchasing American properties. How would this impact the foreign exchange market for the koruna and the dollar? How would the changing value of the dollar impact American exports? U.S. dollar/Czech koruna/Exports Appreciate/ Appreciate/ Decrease Appreciate/ Depreciate/ Decrease Appreciate/ Depreciate/ Increase Depreciate/ Appreciate/ Decrease Depreciate/ Appreciate/ Increase 2. If the US. Government impose a tariff on imported steel to protect American Steel Manufacturers,...
2) Republic of Haha manufactures pencils. The market demand for pencils in Haha is given by...
2) Republic of Haha manufactures pencils. The market demand for pencils in Haha is given by Pb = 200 ? 4QD. The industry supply curve for pencils in Haha is given by PS = QS. Suppose that the world price of pencils is $20 per unit. c) Suppose that the government decides to impose a 50% import tariff on pencils. The domestic producers decide to sell at the world price for pencils after tariff. What is the amount imported now,...
Scenario 1: Suppose that, as part of an international trade agreement, the U.S. government reduces the...
Scenario 1: Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of coffee? Explain your reasoning.
Suppose that the U.S. government increases the tariff on imported steel and aluminum. Will this affect...
Suppose that the U.S. government increases the tariff on imported steel and aluminum. Will this affect the supply or the demand for new automobiles? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of new automobiles manufactured in the U.S. in general? Explain your reasoning.
Suppose the domestic demand for television sets is given by the following demand equation: Qd =...
Suppose the domestic demand for television sets is given by the following demand equation: Qd = 2400- 10P, where P is the price of television sets in dollars. The domestic supply of television sets is: Qs =2P. Finally assume that television sets can be imported at the world price of $160. Suppose the government bans the import of television sets. How much would domestic consumer surplus and domestic producer surplus change as a result of this policy and what would...
Question 1: While the U.S. both imports and exports computers, we import a much larger amount...
Question 1: While the U.S. both imports and exports computers, we import a much larger amount than we export. For this question, assume that the U.S. either imports completely or exports completely and that the trade balance reflects something fundamental about our resources and production costs relative to the rest of the world. Use a detailed diagram to show supply and demand in the market for computers in U.S. Label all areas in the graph in order to answer the...
1. list one case for trade restrictions 2. Suppose the following table reflects the domestic supply...
1. list one case for trade restrictions 2. Suppose the following table reflects the domestic supply and demand for radios: Price $18 $16 $14 $12 $10 $8 $6 $4 Qs 8 7 6 5 4 3 2 1 Qd 2 4 6 8 10 12 14 16 a. Graph these market conditions and identify the equilibrium price and quantity. b. Now suppose that foreigners enter the market, offering to sell an unlimited supply of radios for $6 a piece. Illustrate...
QUESTION 17. Suppose there is an increase in the foreign interest rate. A country that fixes...
QUESTION 17. Suppose there is an increase in the foreign interest rate. A country that fixes its exchange rate   the Government instead uses a short‐term expansionary fiscal policy such as increasing government spending or cutting taxes) to improve the economy,   A. Both the current account and output will increase in the short‐run. B. The current account will worsen in the short run, and output will increase. C. Output will increase, but there will be no effect on the current account,...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in terms of the means of collection in terms of the different tariff rates applied in terms of special purposes for collection 2. The effects of import tariffs concepts of consumers surplus and producers surplus the welfare effects of import tariffs 3. Measurement of import tariffs the "height" of import tariffs nominal versus effective tariff rates II. Chapter Summary 1. The means of collecting import...