Question

Minimum of three sentences for each question, please

1. How do tariffs on steel "protect" steel producers?
2, How does a subsidy given to steel producers “protect” them?
3. What does Milton Friedman mean by a special interest group?

Answer 1

Answer 1:

Tariffs on steel protect the steel producers by increasing the price of imported goods which are in competition with the domestically produced goods. Thus, demand for imported steel products will decline and demand for domestically produced steel products will rise. Thus, tariffs on steel protect steel producers by reducing competition in the market.

Answer 2:

A subsidy to steel producers helps in protecting the producers by covering the cost of production of steel. Also, the cost is not passed on to the consumers and thus prices remain low and sales are high. Thus, total revenue increases and the cost of production is also covered.

Answer 3:

The special interest groups refer to a group or organization which receives special advantages mainly through political lobbying. They are able to meet their needs and requirements by lobbying with the political classes especially the big business groups are examples of special interest groups.