Question

a previously enacted steel tariff is removed. which of the graphs shows the correct effect on the ad-as framework for the country exporting steel?

Answer 1

When a tariff is removed, it affects the supply of steel in the exporting country. The removal of the tariff leads to a rightward shift in the supply curve, resulting in a lower equilibrium price and an increased equilibrium quantity.

Step-by-step explanation:

A previously enacted steel tariff is removed, which affects the supply of steel in the exporting country. When the tariff is removed, it is equivalent to a decrease in the cost of production, resulting in a rightward shift in the supply curve. This causes a movement down the demand curve, ultimately lowering the equilibrium price and increasing the equilibrium quantity.

Answer 2

The graphs which shows the correct effect on the ad-as framework for the country exporting steel is graph B (option B)

Why is this correct?

Upon the removal of the previously enacted steel tariff, the resulting decrease in prices and production costs leads to an expansion in the aggregate supply (AS) within the economy.

Consequently, the AS curve shifts to the right, exemplifying the correct outcome as stated in graph B (option B)

See missing part of the question on the attached images below.