IA3 - COMMENTARY COVERSHEET Economics commentary number...

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COMMENTARY COVERSHEET Economics commentary number: SL Number 3 Title of extract: U.S. to Impose Tariff on Tires From China Source of extract: The Washington Post (Online): http://www.washingtonpost.com/wp- dyn/content/article/2009/09/11/AR2009091103957.html Date of extract: 12/09/09 Word count: 747 words Date the commentary was written: 7/11/10 Section of the syllabus to which the commentary relates: Sections 4.2 Candidate name: Jacky Chong Candidate number:
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a b c d e f g h i j k S (U.S.A.) S (China) + tariff S (China) D Quantity of tires Price of tires ($) P e P China +T P China 0 Q 1 Q 3 Q e Q 4 Q 2 Figure 1: A tariff on tires import U.S.’s imposition of tariff on tires from China Jacky Chong Barack Obama, the president of the U.S.A., recently imposes a tariff on tires imported from China. This decision is made in an attempt to “bolster the ailing U.S. tire industry”. Over the past five years, more than 5,000 jobs have been lost in the U.S.A. Barack Obama believes that this is because of the “tripled” quantity of tires imported from China. A tariff is a tax that is charged on imported goods. This measure is frequently used by different countries to raise the prices of imported goods and to eliminate the cost advantage of the imports. It shifts the world supply curve upwards since it is placed on the foreign producers of the good and not the domestic producers. Subsidy, which will be mentioned in the evaluation, is an
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