Running Head: MULTIPLE ESSAY QUESTIONS

Economics

Multiple Essay Questions

Name.

Institution.

Date.
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Question One.

Imposing tariffs due to foreign Governments subsidize industries. When a country subsidizes its

industries, it hurts the consumers and other non-subsidized industries. He argues that the rich

coming from other countries imposes onerous duties and tariffs on steel imports (Mitra, 2016).

They imposed tariffs for security reasons. National Security, as the President says, should be

considered highly. It should co-exist within the citizens of the country. Triumph uses Section 232

of the trade regulations of the United States, which restrict imports to improve national security.

The tariffs are essential since the country's domestic industries are destroyed. The President

argues that steel is essential in every citizen in America as it has an impact on every person's life.

He further says that infrastructure, vehicles, appliances, energy pipelines, and building

construction industries require steel, which is a contradiction. There are high possibilities of

importing steel by misusing the country's economy as regarded by President Triumph.

Question Two:

The President's arguments on the sudden imposition of steel tax in the US include steel

dumping where foreign countries dump massive amounts of steel, not only hurting the country at

large but also companies themselves. He argues that foreign steel dumping to the United States

affects national security, employment cases, and the pricing of steel in the country as foreign

countries take advantage of the US (Ciuriak, & Xiao, 2018).

From the cited cases, the CEO of California suggests that the metal company gradually loses its

business after the steel tax imposition as metal prices go up. The case of President of Clips &

Clamps, says that he cannot pay taxes due to low-profit collection. From the cited cases, it is

evident that companies involving steel and aluminum lose.

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However, President Triumph wins since his argument is to cut down any foreign country trying

to compete with local industries in the country. Consumer surplus becomes low as prices are

high; hence customers buy the products at higher rates than they would buy them at equilibrium.

The producer surplus becomes relatively high since they will sell at high prices relative to the

customer's willingness to buy. The total surplus becomes low as customers tended to buy the

product reduce as well as the producers produce less goods (Mitra, 2016).

Goods already in the market will go up as the demand reduces. The supply, on the other hand,

reduces making the steel price commodities to increase while the quantity decreases.

Question Three:

The world price of sugar currently of $0.26 per kilogram. The domestic price $0.32 per

kilogram. The prices seemed to increase due to sugar cronyism in the country. The existence of

trade barriers lead to lower world sugar price than the domestic price. Chicago should import

sugar based on the estimates listed. As much as producers will suffer the case, the price of sugar

when imported will fall to the world price hence making it favorable to consumers to buy than

when prices are high.

The US government uses various strategies to make producers more competitive. It has offered

subsidies for loans and set laws to protect them. Andrew Creeptons suggests that through tariffs,

the government inflates the price of sugar hence making producers to be competitive to enjoy

profits.

Tariffs impact an increase or inflated price of sugar. This policy has led to low consumption of

sugar as producers produce less to meet demand. Andrew suggests that the government, when

excess sugar is produced needs to buy back and resell at a loss. When prices are high than the
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market price, consumers pay higher than their willingness to pay. The competitiveness in the

sugar industry suggests that only efficient producer's producer sugar less relatively lower than

the market price. This results in a decline in total welfare for the product.

Question Four:

A tax incidence depends on the relative inelasticity of demand and supply (Dyreng, Jacob,

Jiang, & Müller, 2019). Imposing high taxes on soda in Philadelphia affects producers or sellers

as the tax directly lies to the suppliers. Melvin Robinson says that customers refuse to buy sodas

at Bruno's Pizza as the tax rates have increased prices of the commodity. This is elastic demand

as the consumer is more sensitive to the price of soda. If policy makers' intention is to raise

revenue to fund early childhood education by imposing sugar-sweet beverage tax, they should

put into consideration the demand from customers. As the policymakers depend on the new soda

tax system to fund city programs, it is likely for them to provide little or no funds for the

programs. Increased prices lower customers' demand for commodities hence negatively affecting

the Government revenue.

The size of welfare loss is large since there is less production of commodities. There is a

decreased economic well-being as a result of the imposition of tax. The price ceiling by the

government due to the imposition of taxes to the soda lowers the production size of the

commodity (Mitra, 2016).

Question Five:

Raising the minimum wage could increase or reduce the poverty situation cited in the service-

based economy. If the city's intention is to purposefully raise their living standards, they should

consider the demand and supply of labor in the city. If the policymakers decide to increase wages
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to $20 for each, employees need to reduce employers in order to cut expenses as it will affect

profits. It is evident from Target Company that employees are not fully satisfied with the current

negative economy due to trade-offs. The labor demand will increase as laborers will yearn to

look for other secondary jobs to increase their income, as argued by Lee, a staff member at

Target.

In an increase in minimum wages, labor supply exceeds labor demand. The producer surplus

increases but lowers the consumer surplus for employers. This results in an increase in total

surplus.

Question Six:

Gross Domestic Product depends on Consumption, Investments, Government spending as well

as imports and exports. The legalization of marijuana in Canada generates a GDP in

consideration of consumer consumption of the product as well as any tariffs imposed on it. If the

4.9 million consumers consume the product fully with no local tax imposition, Canada is likely

to grow more in terms of GDP. Exporting weed should be more; hence the government should

invest more locally as it should also regulate import tax from other countries. However,

marijuana is said to have negative effects as addiction, low work output, increased mental

disorder, which affects the economy negatively.

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Reference.

Ciuriak, D., & Xiao, J. (2018). Quantifying the Impacts of the US Section 232 Steel and

Aluminum Tariffs.

Costanza, R., Hart, M., Kubiszewski, I., Posner, S., & Talberth, J. (2018). Lessons from the

History of GDP in the Effort to Create Better Indicators of Prosperity, Well-being, and

Happiness. In Routledge Handbook of Sustainability Indicators (pp. 117-123). Routledge.

Dyreng, S., Jacob, M., Jiang, X., & Müller, M. A. (2019). Tax incidence and tax avoidance.

Available at SSRN 3070239.

Mitra, D. (2016). The Political Economy of Trade Policy: Theory, Evidence and Applications.

World Scientific Publishing Company.