Test12008 - Page 1 of 5 Last Name: _ First Name: _ Student...

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Page 1 of 5 Last Name: ____________________ First Name: ____________________ Student Number: ________________ Economics 100 Professor James E. Pesando Term Test 1 – October 24, 2008 Length: 50 minutes Students Must Answer All Questions in the Space Provided. Non-Programmable Calculators (only) Allowed. ______________________________________________ please enter the multiple choice answers in the box below : 1 2 3 4 5 6 examiner’s report: question points 1 2 3 4 5 total
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Page 2 of 5 1. (20 points) In one week, Canada can produce 20 cars or 40 bushels of wheat. In one week, Argentina can produce 20 cars or 10 bushels of wheat. (a) Which country has a comparative advantage in the production of cars? Why? Which good will Canada export, if trade occurs? (b) If the trade ratio is one bushel of wheat for one car, what is the maximum number of cars (par week) that Canada can consume? Explain your reasoning. (c) If the trade ratio were 0.5 bushels of wheat for one car, would Argentina benefit from trade? Explain your answer.
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Page 3 of 5 2. (22 points) The government eliminates the $5 tax on a carton of cigarettes. The tax on cigarettes is paid by sellers. The supply curve for cigarettes is positively sloped. (a) Assuming that the demand curve for cigarettes is downward sloping, draw a diagram to show the old market price and the new market price and the old and the new quantity of cigarettes bought
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Test12008 - Page 1 of 5 Last Name: _ First Name: _ Student...

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