Explain how could you estimate the net welfare loss

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Reference no: EM1359968

Suppose that the world price for steel is below the U.S. domestic price, but the government requires that all steel used in the United States be domestically produced.

a. Use a diagram like the one below to show the gains and losses from such a policy.

b. Explain how could you estimate the net welfare loss (deadweight loss) from such a diagram??c. What response to such a policy would you expect from industries (like automobile producers) that use U.S. steel??d. What government revenues are generated by this policy?

Reference no: EM1359968

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