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article in a newspaper or magazine that discusses a US government policy on goods or services

Select an article in a newspaper or magazine that discusses a US government policy on goods or services. Analyze the situation:

Summarize the article using at least three economic terms and theories covered in class.
Identify the impact of the policy on Demand or Supply of the good(s) or service(s). Discuss the change(s).
Draw a supply and demand graph to explain this change. Be sure to label your graph and clearly indicate the change of the curve.

Solution Preview

Recently the US government imposed a tariff of 35% on Chinese made tyres imported in the United States. The stated reason was that Chinese tyres were hurting the domestic tyre industry in the US. The details of the story can be seen here:

http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0,dwp_uuid=2f146ad2-f122-11dd-8790-0000779fd2ac.html

What the US government has effectively done is that by imposing the tariff they have made the Chinese tyres relatively costly. This increased price will in turn reduce the demand for Chinese made tyres in the US. What will also happen is that the increased tariff, and reduced supply will increase the equilibrium price of tyres in the US. The increased price will mean more US producers can now compete in the US tyre markets. The government hopes that this will make the US domestic producers more competitive and help sustain, and maybe even create, ...

Solution Summary

An article in a newspaper or magazine that discusses a US government policy on goods or services is modeled.

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