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Page 1 of 6 Last Name: ____________________ First Name: ____________________ Student Number: ________________ Economics 100 Professor James E. Pesando Term Test 1 – October 27, 2006 Length: 55 minutes answer ALL questions in the space provided Aids: Pen/ Pencil and non-programmable calculator ________________________________________________ please enter the multiple choice answers in the box below : 1 2 3 4 5 6 7 8 9 ________________________________________________ examiner’s report: question points 1 2 3 4 5 total
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1. (20 points) Country L and Country S each produce 2 goods, food and books. In Country L, each worker can produce either 2 units of food or 4 books. In Country S, each worker can produce 4 units of food or 4 books. (a) In each country, what is the opportunity cost of producing one book? Which good will Country S import? Why? (b) Due to climate change, each worker in Country L becomes one-half as productive and thus can produce only 1 unit of food or 2 books. How does this change the comparative advantage of Country L and of Country S? Which good will Country S now import? (c) If the trade ratio were one book for one unit of food, would Country L benefit from trade? Why or why not? Would Country S benefit from trade? Why or why not? 2. (14 points) You have decided to attend a rock concert, which is free. The alternatives are to attend a hockey game, which you value at $30, or to attend a book reading, which you value at $25. Both are also free. (a) What is the opportunity cost of your attending the rock concert? Why?
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This note was uploaded on 03/02/2010 for the course ECO ECO100 taught by Professor Inheart during the Spring '09 term at University of Toronto- Toronto.

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Test12006 - Page 1 of 6 Last Name: _ First Name: _ Student...

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