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ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305659094ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305659094 Exercise 5
Outline the gains from trade, and explain why countries might still decide to trade even if no country had a comparative advantage
(Trade Restrictions) 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 that follows 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?
Effect of a Tariff 11eb5b3a_fa28_54f6_a9f3_65819a4558d3
Effect of a Quota 11eb5b3a_fa28_54f7_a9f3_d7f3cf212b2e
(Trade Restrictions) 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 that follows 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?
Effect of a Tariff 11eb5b3a_fa28_54f6_a9f3_65819a4558d3
Effect of a Quota 11eb5b3a_fa28_54f7_a9f3_d7f3cf212b2e
Explanation
Verified
Verified
Figure 1.1 shows the relation between qu...
ECON MACRO 5th Edition by William McEachern
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