1) How would the removal of the U.S. tariff on softwood lumber change the price of softwood lumber in the United States and the quantity of U.S. imports?
With removal of the U.S. tariff on softwood lumber, the price of softwood lumber in the United States ______________, and the quantity of lumber imported ______________.
Wrong! - When the U.S. tariff is removed, does the price of softwood lumber in the United States rise or fall? What happens to the quantity of softwood lumber produced by U.S. lumber mills and the quantity of softwood lumber demanded by U.S. homebuilders? Does the quantity of lumber imported change?
Good Job! - When the tariff is removed, the price falls to the world price. As the price falls, the quantity of softwood lumber produced by U.S. lumber mills decreases and the quantity of softwood lumber demanded by U.S. homebuilders increases, so the quantity of imports increases.
