Econ 212-Spring 2006 Final

Econ 212-Spring 2006 Final - Spring 2006 ECONOMICS 212...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Spring, 2006 ECONOMICS 212 Professor D. K. Benjamin FINAL EXAM Print and encode your (i) name, (ii) student number, and (iii) course and (iv) quiz section number on the scoring sheet (see the overhead). If you fail to do the preceding actions correctly, you will be penalized five points . On the answer sheet, mark the letter corresponding to the correct answer, using a pencil. There are fifty (50) questions. You have plenty of time; read the questions carefully and engage brain before putting pencil in gear. Go Tigers. Questions 1-4 are based on the following information. Two countries, Italy and America, initially are capable of producing only two goods: potables (P) and edibles (E). Italy can produce a maximum of 12 P and 0E, or 24 E and 0P, or any linear combination of these numbers. America can produce a maximum of 40 P and 0 E, or 30 E and 0 P, or any linear combination of these numbers. 1. Given this information, you can conclude that a. Italy has a comparative advantage in producing P b. Italy has a comparative advantage in producing E c. Neither has a comparative advantage in producing P d. America has a comparative advantage in producing E e. Both (a) and (d) 2. Suppose the price of edibles, measured in dollars, is equal to the price of potables, also measured in dollars. If the two countries seek to maximize their income (measured in dollars), how much of each good will each country produce? a. Italy will produce only potables, America only edibles b. Italy will produce only edibles, America only potables c. Both countries will produce only potables d. Both countries will produce only edibles e. Italy will be indifferent about how to spend its time between edibles and potables 3. Suppose that, as a result of new government regulations, Italy’s ability to produce both potables and edibles decreases dramatically. Specifically, assume Italy can now produce a maximum of 6 P and 0E, or 12 E and 0P, or any linear combination of these numbers. As a result of this technological change, a. Italy’s wealth is now much lower than before b. Italy now has a comparative advantage in producing P c. America now has a comparative advantage in producing E d. the comparative advantage of each country is unchanged e. both (a) and (d) are correct 4. Suppose the price of edibles, measured in dollars, now rises to become three time the price of potables, also measured in dollars. If the two countries seek to maximize their income (measured in dollars), how much of each good will each country produce? a. Italy will produce only potables, America only edibles b. Italy will produce only edibles, America only potables c. Both countries will produce only potables d. Both countries will produce only edibles e. Italy will be indifferent about how to spend its time between edibles and potables
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Questions 5-7 are based on the following information. Output in Italy is produced using capital, labor, and knowledge. There is initially a fixed amount of capital (K 0 ) and knowledge (k
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/29/2008 for the course ECON 212 taught by Professor Lady during the Spring '07 term at Clemson.

Page1 / 9

Econ 212-Spring 2006 Final - Spring 2006 ECONOMICS 212...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online