MidtermW2005 - NAME Student Number Multiple Choice Short...

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NAME_____________________________ Student Number_____________________________ Multiple Choice____________ Short Answer____________ Tota l_____________ ECON 3150 section M Midterm Exam February 24, 2005 You have 1 hour 20 minutes to complete the test. Please write your name and your student number in the space provided. You should answer every question. Please use pens only . Each multiple choice question is worth 4 points. _____________________________________________________________________ Part I. Circle the best answer for each question: 1. Consider two countries, Canada and Mexico, each producing 2 goods, auto parts and software, using 1 factor of production, labour. Marginal productivities of labour (output per worker) are: Table 1. Canada Mexico Software 50 10 Auto parts 25 10 Which of the following is true? 1. Canada has comparative advantage in software, and Mexico has absolute advantage in software. 2. Canada has comparative advantage in auto parts. 3. Mexico has comparative advantage in auto parts. 4. Mexico has absolute advantage in auto parts. 2. Consider Table 1 . In autarky, price of software in terms of auto parts is: 1. 0.5 in Canada, 1 in Mexico. 2. 5 in Canada, 2.5 in Mexico. 3. 2 in Canada, 1 in Mexico. 4. 1 in Canada, 1 in Mexico.
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2 3. Consider Table 1 . When Canada and Mexico open for trade: 1. Mexico will export auto parts. 2. Both countries will continue to produce both goods. 3. Canada will export auto parts. 4. Mexico will import auto parts.
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