Question

1) A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this week’s discussion, you get a chance to demonstrate your ability to analyze the effects of a “shock” to the market for the automobile manufacturing in the U.S.. Make sure to support your idea with at least one source. State whether the reality is as you expected. Scenario: Suppose that the U.S. government increases the tariff on imported steel and aluminum. Will this affect the supply or the demand for new automobiles? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of new automobiles manufactured in the U.S. in general? Explain your reasoning and include one credible source. If you are unable to develop a graph digitally, draw your graph by hand, take a picture, then upload it to your discussion post.

Answer 1

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