Employing a general equilibrium approach, describe the effect of a new law that prohibits steel imports
What will be an ideal response?
The initial effect is that the supply curve for steel shifts leftward. This raises the price of steel. The largest users of steel are the automobile industry, the construction industry, and the appliance industry. The increased cost of inputs will raise the price of the goods produced by these industries. Given time, these industries will look to substitute plastic or aluminum in place of steel, raising the prices of these materials.
You might also like to view...
Which of the following situations will arise in the domestic market following the removal of an import quota?
A) imports increase, domestic production increases, prices increase B) imports decrease, domestic production decreases, prices increase C) imports decrease, domestic production increases, prices decrease D) imports increase, domestic production decreases, prices decrease
The inflation rate measures the percentage increase in the price level from one year to the next
Indicate whether the statement is true or false
The total costs of federal regulation
A) encompasses only explicit costs of satisfying regulatory demands. B) also includes the explicit costs associated with regulations issued by 50 different state governments. C) encompasses only opportunity costs of satisfying regulatory demands. D) encompasses both explicit and opportunity costs of satisfying regulatory demands..
In an open economy, the price of a TV will be ________.
A. $75 B. $175 C. $275 D. $125