Mock Exam 2

Mock Exam 2 - Mock Exam II ECON 452-500 Prof Diego...

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ECON 452-500 Prof: Diego Vacaflores 1. In the 2-factor (labor and capital), 2 good Heckscher-Ohlin model, an influx of workers from across the border would (a) move the point of production along the production possibility frontier curve. (b) shift the production possibility curve outward, and increase the production of both goods. (c) shift the production possibility curve outward and decrease the production of the labor- intensive product. (d) shift the production possibility curve outward and decrease the production of the capital-intensive product. (e) None of the above. 2. In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of (a) capital. (b) the relatively abundant factor of production. (c) the relatively scarce factor of production. (d) the relatively inelastic factor of production. (e) the factor of production with the largest elasticity of substitution. 3. Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is relatively labor abundant, then once trade begins (a) wages and rents should rise in H (b) wages and rents should fall in H (c) wages should rise and rents should fall in H. (d) wages should fall and rents should rise in H. (e) None of the above. 4. If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade were to open up between these two countries, (a) the relative price of the capital-intensive product would rise in Australia. (b) the world price of the land-intensive product would be higher than it had been in Belgium. (c) the world price of the land intensive product would be higher than it had been in Australia. (d) the relative price of the land intensive product would rise in Belgium.
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Mock Exam 2 - Mock Exam II ECON 452-500 Prof Diego...

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