ECO100 Short Report On Principles Of Economics Management - Assessment 3

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Assessment 3: Individual Work

Question No. 2

As part of his USA first policy, President trump has imposed: (1) a price floor on wheat to Support US 'farmers' income; (2) a tariff on of tyres imported from China.

  1. On a demand and supply diagram, show and explain whether the price floor In the US creates a shortage or a surplus in the Market for wheat. Assume that the US does not trace wheat internationally [5 marks]
  2. Show on a demand and supply diagram and explain how the price floor in the US Changes consumer surplus, producer surplus, and deadweight loss in the domestic wheat market. (5 marks)
  3. Show on a demand and supply diagram and explain the impact of the tariff on (1) the quantity of tyres produced and demanded in the US, and (2) Economic Surplus in the US. clearly identify the winners and losers. [12 marks]
  4. Are the policies (price floor and tariff) efficient and fair? Apply the fair results and fair rules notions of fairness in your discussion. [12 marks]

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