Question

You may be aware that in the united states, price floors are commonly used to support farmers, such as for dairy products. recently, several u.s. trading partners have imposed tariffs on dairy products exported from the united states. For the trading partners, the tariffs have been effective and are reducing dairy exports from the united states. the result is that the domestic euilibrium price of milk is now below the price floor. What i am curious about now is how these tariffs will change the u.s. domestic price of milk, the quantity of mild sold in the united states, and if this will result in a surplus or shortage of mil?

Answer 1

The tariffs imposed on dairy products exported from the United States will lead to a decrease in the domestic price of milk, an increase in the quantity of milk sold in the United States, and a surplus of milk.

Step-by-step explanation:

When a country imposes tariffs on a specific product, such as dairy products, it effectively raises the price of imported goods. In this case, the tariffs imposed on dairy products exported from the United States have reduced the quantity of milk being exported, causing the domestic equilibrium price of milk to fall below the price floor set by the government. As a result, the domestic price of milk in the United States will decrease, the quantity of milk sold domestically will increase, and there will likely be a surplus of milk due to the decrease in exports.