219 Midterm Exam 2005

219 Midterm Exam 2005 - McGill University Professor...

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Unformatted text preview: McGill University Professor Christopher Ragan 154-219A Fall 2005 Economics 219A Midterm Exam October 20, 2005 Your Name___________________________ Student # ____________________________ Note: Cheating is against the rules at McGill. Please keep your eyes on your own exam. Looking at other students’ exams is strictly forbidden! This examination is out of a total of 80 points (roughly one point per minute). You must answer all questions in the space provided. Please write neatly! Question 1. (10 points) Explain what is meant by the specialization of labour and why it is more efficient than universal self-sufficiency. _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ ______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ Question 2. (15 points) Consider the world market for coffee. Suppose there are many small producers and also many small consumers. Assume that all coffee is more-or-less identical and that information in the market is very good. a) Use a diagram to illustrate the market-clearing values of price and quantity in the world coffee market. Also show the amount of consumer and producer surplus in this market, and explain what they represent. b) Now, suppose that a large group of producers decides to collectively restrict their output of coffee. Explain (in words) the likely effects on price, quantity, and overall economic welfare. _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________...
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This note was uploaded on 09/12/2008 for the course ECON 208 taught by Professor Dickenson during the Spring '07 term at McGill.

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219 Midterm Exam 2005 - McGill University Professor...

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