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# Tariff Tax question How to solve?# 5 ATTACHMENT PREVIEW Download attachment Screen Shot 2019-08-06 at 2.14.56 PM.png Question 5. Use the graph below to answer this question. Price (S/metric ton Domestic Supply 5625 448 B April 2002 363 C E G February 2002 Domestic Demand 7.4 7.9 9.6 10.2 Quantity (millions of metric tons) A tariff is a tax on imports. In March 2002, then President George W. Bush put a tariff on imported steel as a means of protecting the domestic steel industry. In February, before the tariff went into effect, the United States produced 7.4 million metric tons of crude steel and imported about 2.8 million metric tons of steel products at an average price of \$363 per metric ton. Two months later, after the tariff was in effect, U.S. production increased to 7.9 million metric tons. The volume of imported steel fell to about 1.7 million metric tons, but the price of the imported steel rose to about \$448 per metric ton. The supply and demand diagram below shows this situation (along with an estimated no-trade domestic equilibrium at a price of \$625 per metric ton and a quantity of 8.9 million metric tons). What is the loss in CS suffered by U.S. steel consumers as a result of the tariff? a) A b) B c) C d) D e) E f) F g ) G h) A + B i) C + D j) E + F k ) D + G 1) A + D +E m ) B +F + G n) A + B + E +F o) C + D + E +F+G p) A + B + D + E +F+G q) A + B + C + D + E +F+G r) None of the above s) Impossible to know

Price
(S/metric
ton)
Domestic
Supply
\$625.
448
A
B
April 2002
363
CDEFG
February 2002
Domestic
Demand
7.4 7.9
8.9
9.6 10.2 Quantity (millions
of metric tons)

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