Sandra’s Steel Mill has decided that lobbying Congress to pass a tariff on impor

Question

Sandra’s Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost less than trying to modernize its facility to compete with foreign steel prices. Sandra’s Steel Mill will
A. decide that lobbying is wrong and modernize its facility.
B. participate in rent seeking and lobby Congress for the tariff.
C. lobby Congress for the tariff and modernize its facility.
D. produce more steel to attract more customers.
E. lower its price to compete with the imported foreign steel.

Explanation / Answer

Given that lobbying congress would cost less than to try to modernize its facility, Sandra's steel mill will participate in rent seeking and lobby congress for the tariff. This is because it is cheaper so it would definitely choose option c as it would cost a lot more. So answer is (b).

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