Practice Exam For Exam 2 1 
Practice questions for EC340 Midterm Exam #2
1. To help its domestic producers, the United States unilaterally raised tariffs on ____ in early 2002, but after a ruling against the United States by the WTO, it was forced to remove the tariff.
A) autos
B) steel
C) tires
D) dairy products
Use the following to answer questions 2-6:
SCENARIO: GUATEMALA 'S TELEVISION MARKET
This table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set.
Price
$100
$200
$300
$400
$500
$600
$700
Quantity Demanded
3,200
2,800
2,400
2,000
1,600
1,200
800
Quantity Supplied
200
400
600
800
1,000
1,200
1,400
2. (Scenario: Guatemala 's Television Market) In the absence of trade, how many TV sets will Guatemala produce?
A) 1,400
B) 1,200
C) 1,000
D) 800
Page 1
3. (Scenario: Guatemala 's Television Market) With free trade, how many TV sets will
Guatemala produce?
A) 1800
B) 600
C) 2400
D) 1200
4. (Scenario: Guatemala 's Television Market) Suppose that Guatemala now imposes a
100% tariff on imported TVs. How many TVs will it now import?
A) 0
B) 200
C) 400
D) 600
5. (Scenario: Guatemala 's Television Market) What is the value of the total welfare losses that Guatemala will suffer as a result of the 100% tariff on imported TVs?
A) $270,000
B) $360,000
C) $540,000
D) $720,000
6. (Scenario: Guatemala 's Television Market) Who will benefit from Guatemala 's 100% tariff on imported TVs?
A) Guatemala 's consumers
B) Guatemala 's TV producers
C) Guatemala 's TV importers
D) foreign TV manufacturers
7. When a tariff is imposed, there is always an additional loss. One loss occurs when consumers purchase fewer units of the good because prices have risen, so society loses the value of that consumption. This loss is the:
A) consumption loss.
B) efficiency loss.
C) production loss.
D) transfer from domestic consumers to domestic producers.
Page 2
8. Which of
1. To help its domestic producers, the United States unilaterally raised tariffs on ____ in early 2002, but after a ruling against the United States by the WTO, it was forced to remove the tariff.
A) autos
B) steel
C) tires
D) dairy products
Use the following to answer questions 2-6:
SCENARIO: GUATEMALA 'S TELEVISION MARKET
This table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set.
Price
$100
$200
$300
$400
$500
$600
$700
Quantity Demanded
3,200
2,800
2,400
2,000
1,600
1,200
800
Quantity Supplied
200
400
600
800
1,000
1,200
1,400
2. (Scenario: Guatemala 's Television Market) In the absence of trade, how many TV sets will Guatemala produce?
A) 1,400
B) 1,200
C) 1,000
D) 800
Page 1
3. (Scenario: Guatemala 's Television Market) With free trade, how many TV sets will
Guatemala produce?
A) 1800
B) 600
C) 2400
D) 1200
4. (Scenario: Guatemala 's Television Market) Suppose that Guatemala now imposes a
100% tariff on imported TVs. How many TVs will it now import?
A) 0
B) 200
C) 400
D) 600
5. (Scenario: Guatemala 's Television Market) What is the value of the total welfare losses that Guatemala will suffer as a result of the 100% tariff on imported TVs?
A) $270,000
B) $360,000
C) $540,000
D) $720,000
6. (Scenario: Guatemala 's Television Market) Who will benefit from Guatemala 's 100% tariff on imported TVs?
A) Guatemala 's consumers
B) Guatemala 's TV producers
C) Guatemala 's TV importers
D) foreign TV manufacturers
7. When a tariff is imposed, there is always an additional loss. One loss occurs when consumers purchase fewer units of the good because prices have risen, so society loses the value of that consumption. This loss is the:
A) consumption loss.
B) efficiency loss.
C) production loss.
D) transfer from domestic consumers to domestic producers.
Page 2
8. Which of