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Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60-per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel.Reference: Ref 8-10
__(Scenario: Finnish Steel) What will happen to the Finnish price of steel if Finnish demand increases and a 300,000-ton quota remains unchanged?
It will not change.It will decrease.It will increase.
It will first increase, then decrease.
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