Assume the United States is a large consumer of steel that is able to influence the world price.Its demand and supply schedules are respectively denoted by DU.S.and SU.S.in Figure 4.2.The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2.Import Tariff Levied by a "Large" Country

-Consider Figure 4.2.Of the $100 tariff,$____ is passed on to the U.S.consumer via a higher price,while $____ is borne by the foreign exporter; the U.S.terms of trade:
A) $25,$75,improve
B) $25,$75,worsen
C) $75,$25,improve
D) $75,$25,worsen

Question

Assume the United States is a large consumer of steel that is able to influence the world price.Its demand and supply schedules are respectively denoted by DU.S.and SU.S.in Figure 4.2.The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2.Import Tariff Levied by a "Large" Country
 
-Consider Figure 4.2.Of the $100 tariff,$____ is passed on to the U.S.consumer via a higher price,while $____ is borne by the foreign exporter; the U.S.terms of trade:
A) $25,$75,improve 
B) $25,$75,worsen 
C) $75,$25,improve 
D) $75,$25,worsen

Quizplus · Accepted Answer

The $75 of the $100 tariff is passed on to the U.S. consumer, while $25 is borne by the foreign exporter, leading to an improvement in the U.S. terms of trade.

Assume the United States Is a Large Consumer of Steel