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3150midF09answ

# 3150midF09answ - Name Student Number Multiple Choice Short...

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1 Name_____________________________ Student Number_____________________________ Multiple Choice____________ Short Answer____________ Total_____________ ECON 3150 Midterm Exam October 21, 2009 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: Given the following information: Table 1. Number of Units Produced by One Worker: Home Foreign Wheat 10 20 Cloth 25 15 1. Which country has comparative advantage in production of wheat? A. The foreign country B. The home country C. It could be either country, depends on the price of wheat D. Both countries 2. If the trade is permitted between the countries, which country would export cloth? A. The foreign country B. The home country C. It could be either country, depends on the price of wheat D. Both countries 3. What range of relative prices would make both countries better off trading? A. Each 1 unit of wheat would sell for between 2.5 and 5.0 units of cloth B. Each 1 unit of wheat would sell for between 0.75 and 2.5 units of cloth C. Each 1 unit of wheat would sell for between 0.5 and 1.66 units of cloth D. Each 1 unit of wheat would sell for between 2 and 0.6 units of cloth

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2 4. What changes in production would accompany mutually beneficial trade between the countries? A. It would depend on price of wheat B. Wheat production would decrease in home country C. Wheat production would increase in home country D. Wheat production would decrease in foreign country 5. An improvement in a country’s terms of trade means A. The volume of the country’s imports increases relative to the volume of its exports B. The prices that the country receives for it’s exports rise relative to the prices that it pays for its imports C. The volume of the country’s exports increases relative to the volume of imports D. The prices that the country pays for its imports rise relative to the prices it receives for its exports 6. “Gains from trade” means that A. One country gains what another country loses B. Both countries gain by consuming outside their production possibilities frontier
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3150midF09answ - Name Student Number Multiple Choice Short...

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