The Following Formula Is Used to Estimate the Deadweight Loss

question 122

Multiple Choice

The following formula is used to estimate the deadweight loss from a tariff: where PM is import value; P^W is the world price and M is the volume of imports. Suppose that the United States imposes a 20% antidumping duty on Chinese steel imports when the world price is $500 per ton, the value of imports with the duty is $400 million, and the volume of imports with the duty fell by 10%. Which of the following is the deadweight loss?

• A) $0.01 million
• B) $0.10 million
• C) $4.0 million
• D) $8.0 million

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Definitions:

Canadians

Citizens or residents of Canada, a country located in the northern part of North America.

Consumption

The act of using goods and services to satisfy personal or collective needs and desires, playing a central role in economic theories and the functioning of economies.

Basic Necessities

Fundamental requirements for human survival and wellbeing, including food, water, shelter, and clothing.

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Financial or other resources moved from government bodies to individuals, businesses, or other governments, typically in the form of support or subsidies.