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Q. 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. 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?
How low must a quota be in effect to have an impact? Using a demand-and-supply diagram, illustrate and explain the net welfare loss from imposing such a quota. Under what circumstances would the net welfare loss from an import quota exceed the net welfare loss from an equivalent tariff (one that results in the same price and import level as the quota)?
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. 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?This is done on a supply and demand diagram.
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