midterm2_s2016A_answers.pdf - Section_Student Name ECON 3...

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Section ____________________Student Name__________________________________ 1 ECON 3 Spring 2016A SECOND MIDTERM EXAMINATION ANSWERS There are 25 True/False questions worth 2 points each, 2 short-answer questions worth 50 points for a total of 100 points. Budget your time in each section accordingly. For the short answer section, feel free to comment and explain answers in bullet points rather than in well-crafted essays. (i.e. I’m more interested in the substance and content of your answer than in the style you present it.) Please write legibly. True/False: Use computer scantron. Fill “A” for True. “B” for False (2 pts each): Questions 1-8 : Japan represents a small share in the world demand for wheat. Japan removes its tariff on wheat. All other countries in the world are engaged in free trade before and after the tariff removal. 1. The domestic price of wheat in Japan falls. True. 2. Domestic consumption is lower than domestic production of wheat. False. 3. The world price of wheat falls. False. 4. The tariff removal can decrease overall welfare in Japan. False. 5. The domestic production of wheat increases. False. 6. The Japanese consumption of wheat increases. True. 7. Russia, a large exporter of wheat is better off. False. 8. Russian consumers are worse off. False.
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Section ____________________Student Name__________________________________ 2 Questions 9-12 : After the tariff removal in Japan, wheat exporters begin to subsidize the output of wheat . All other countries in the world are engaged in free trade.
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