Question 9 given by the demand curve, Consider the market for steel in the US. Steel demand in the US is p = 100 – Q. Steel supply to the US comes from domestic and foreign firms, Q' = qis+ q. The US steel firms can supply steel at a constant unit cost of 20, per ton, and thus the US supply curve is a horizontal line at p = 20. The aggregate supply curve for foreign steel, however, is upward sloping and given by = p. Note: As this is a competitive market, the equilibrium price and quantity of steel in the US market is found by equating demand to the sum of US and foreign supply. (a). What is the equilibrium price, p", for steel? How much is supplied by US firms, T? How much is supplied by foreign firms, q? (b). to s = 10 per unit produced. Suppose that the US government pays a subsidy to US steel producers equal What is the new equilibrium price paid by steel consumers in the US? How much steel is sup- plied by US firms and how much is supplied by foreign firms? (c). the steel subsidy. Explain in words the two sources of deadweight loss from the introduction of

Question 9 given by the demand curve, Consider the market for steel in the US. Steel demand in the US is p = 100 – Q. Steel supply to the US comes from domestic and foreign firms, Q' = qis+ q. The US steel firms can supply steel at a constant unit cost of 20, per ton, and thus the US supply curve is a horizontal line at p = 20. The aggregate supply curve for foreign steel, however, is upward sloping and given by = p. Note: As this is a competitive market, the equilibrium price and quantity of steel in the US market is found by equating demand to the sum of US and foreign supply. (a). What is the equilibrium price, p", for steel? How much is supplied by US firms, T? How much is supplied by foreign firms, q? (b). to s = 10 per unit produced. Suppose that the US government pays a subsidy to US steel producers equal What is the new equilibrium price paid by steel consumers in the US? How much steel is sup- plied by US firms and how much is supplied by foreign firms? (c). the steel subsidy. Explain in words the two sources of deadweight loss from the introduction of

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model

Section: Chapter Questions

Problem 10CQ

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