The tarrif's revenue effect (the import tariff multiplied by the quantity of steel imported) can be broken into two components:• Domestic revenue effect• Terms-of-trade effectOn the previous graph, use the green rectangle (triangle symbols) to indicate the domestic revenue effect of the tariff. Then use the purple rectangle(diamond symbols) to indicate the terms-of-trade effect.Now consider the effect of the tariff on welfare in the United States. On the previous graph, use the black triangles (plus symbols) to indicate thedeadweight loss caused by the tariff.True or False: National welfare in the United States increases as a result of a $125-per-ton tariff on steel imports.O TrueFalse 6. Effects of a tariff in a large nationThe following graph shows the domestic market for steel in the United States, where Sp is the domestic supply curve, and Dp is the domesticdemand curve. Assume the United States is considered a large nation, meaning that changes in the quantity of its imports due to a tariff influence theworld price of steel. Under free trade, the United States faced a total supply schedule of Sp+w, which shows the quantity of steel that both domesticand foreign producers together offer domestic consumers. In this case, the free-trade equilibrium (black plus) occurs at a price of $350 per ton ofsteel and a quantity of 16 million tons. At this price, the United States imports 12 million tons of steel.Suppose the U.S. government imposes a $125-per-ton tariff on steel imports.On the following graph, use the tan line (rectangle symbol) to draw the new total supply schedule including the tariff (SD+w+T). Then use the greypoint (star symbol) to indicate the new market equilibrium price and quantity as a result of the tariff.(?)PRICE (Dollars perton)700650600500450400수350300D+W246 8 1012 14 16 18 20QUANTITY OF STEEL (Millions of tons)550250Do200Sp$D+W+TEquilibrium Under TariffDomestic Revenue EffectTerms-of-Trade EffectDeadweight Loss

The tarrif's revenue effect (the import tariff multiplied by the quantity of steel imported) can be broken into two components: • Domestic revenue effect • Terms-of-trade effect On the previous graph, use the green rectangle (triangle symbols) to indicate the domestic revenue effect of the tariff. Then use the purple rectangle (diamond symbols) to indicate the terms-of-trade effect. Now consider the effect of the tariff on welfare in the United States. On the previous graph, use the black triangles (plus symbols) to indicate the deadweight loss caused by the tariff. True or False: National welfare in the United States increases as a result of a $125-per-ton tariff on steel imports. O True False

The tarrif's revenue effect (the import tariff multiplied by the quantity of steel imported) can be broken into two components: • Domestic revenue effect • Terms-of-trade effect On the previous graph, use the green rectangle (triangle symbols) to indicate the domestic revenue effect of the tariff. Then use the purple rectangle (diamond symbols) to indicate the terms-of-trade effect. Now consider the effect of the tariff on welfare in the United States. On the previous graph, use the black triangles (plus symbols) to indicate the deadweight loss caused by the tariff. True or False: National welfare in the United States increases as a result of a $125-per-ton tariff on steel imports. O True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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