exam2001 - Exam ARE 201 (Trade module), Fall 20001 Attempt...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Exam ARE 201 (Trade module), Fall 20001 Attempt to answer all questions. For all questions below, assume a two-commodity model. Provide a brief explanation for your answers. (For example, “It increases” is not a su cient answer, even if the direction is correct; but do not write essays. In some cases you need only state a theorem or draw a graph and provide a very short explanation. If you use a graph, be sure to label axes and curves. ) 1) (30 points) A country moves from autarky to trade. The world relative commodity price is di f erent than the country’s autarkic price. How does this opening to trade a f ect workers’ welfare in the (a) Ricardian model, and (b) sector-speci f c (Ricardo-Viner) model? (Workers own only labor.) 2) (40 points) Use the H-O-S model. Under free trade, a small coun- try produces both commodities, food and cloth, and imports food. Cloth production is relatively capital intensive, and production of cloth creates a negative externality for workers. Capital owners do not experience the ef-
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

exam2001 - Exam ARE 201 (Trade module), Fall 20001 Attempt...

This preview shows document pages 1 - 2. Sign up to view the full document.

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