Midterm 2 Answer Key

Midterm 2 Answer Key - Midterm 2 Answer Key Econ 114,...

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Midterm 2 Answer Key Econ 114, Summer 2010 Multiple Choice Questions Version A Version B 1. C 1. B 2. D 2. C 3. C 3. C 4. A 4. D 5. A 5. D 6. B 6. B 7. B 7. B 8. D 8. C 9. B 9. B 10. B 10. D Short Answer Questions Economic development tends to be accompanied by extensive migration from rural to urban areas. This problem has to do with the importance of labor mobility between sectors. (12 points) a. When more than L* people work in sector 2, the MPL 2 < MPL 1 . This means that each worker after L* could be producing more output working in sector 1 than in sector 2. This will result in a lower wage for workers in sector 1, and a loss in productivity in the economy. b. People in low income countries tend to depend on family networks for insurance against income risks. The importance of family networks in low income countries will increase the cost of moving away from family in order to work in a different sector, resulting in a misallocation of workers across sectors.
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This note was uploaded on 12/05/2010 for the course ECON 114 taught by Professor Cindybenelli during the Summer '08 term at UCSB.

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Midterm 2 Answer Key - Midterm 2 Answer Key Econ 114,...

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