Supply and demand in action in the steel market

Here are some additional questions?

1. How does an increase in the Yen/dollar exchange rate (the dollar is stronger relative to the Yen) affect the dollar price of steel imported from Japan?
2. How does the change in the dollar price of steel imported from Japan affect the US demand for steel produced in the US?
3. How does the change in demand for steel produced in the US affect the equilibrium price of steel produced in the US?
4. How do the changes affect the supply of automobiles produced in the US?

U.S. Steel Prices Tumble in February
by: John W. Miller
Feb 27, 2015
Click here to view the full article on WSJ.com

TOPICS: International Trade

SUMMARY: A stronger dollar helped spur a sharp rise in steel imports, flooding the U.S. market with low-priced products and sending steel prices in the nation in February to their lowest level in nearly 5½ years.

CLASSROOM APPLICATION: Students can evaluate the effect of an increase in the value of the dollar and also the decreased demand for steel from the U.S. oil and gas industry on steel prices in the U.S. They can also evaluate the effect of the decrease in U.S. steel prices on the profits of companies that assemble autos in the U.S. and on U.S. consumers.

QUESTIONS: 
1. (Introductory) What is the effect of an increase in the value of the dollar on U.S. imports of steel?

2. (Advanced) What is the effect of an increase in the value of the dollar on steel prices in the U.S.?

3. (Advanced) What is the effect of the recent events in the market for steel on the profits of U.S. steel companies as well as the profits of U.S. companies that purchase steel?

Reviewed By: James Dearden, Lehigh University