The Following Table Gives the Hypothetical Supply and Demand of Television

question 39

Multiple Choice

The following 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. 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

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Definitions:

Stock Financing

The process of raising capital through the sale of shares in a company, providing investors with partial ownership and potential dividends.

Incremental Value

The additional value generated by undertaking a specific action or project, compared to not doing so.

Value Per Share

The monetary worth assigned to a single share of stock, based on the company's total valuation divided by the number of outstanding shares.

Equity-Financed

A method of financing in which a company raises capital through the sale of shares, rather than borrowing through debt.