4431vMidterm - ECON 4431V International Trade(Honors Spring...

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ECON 4431V: International Trade (Honors) Spring 2005 Midterm Examination March 23, 2005 INSTRUCTIONS: This exam has 100 points and 4 bonus points. Answer the questions (the bonus questions are optional) in the provided blue books. YOU SHOULD ANSWER: PART A: ANSWER ALL QUESTIONS (30 points, 2.5 points per question) PART B: ANSWER THREE OUT OF FOUR QUESTIONS (69 points, 23 points per question) Don’t forget to write your name in the blue book (It counts for 1 point!) . This is a closed book exam. You have 75 minutes (1 hour and 15 minutes) to finish this exam. GOOD LUCK! 1
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PART A: MULTIPLE QUESTIONS (30 points total, 2.5 points each) 1. Given the following information: Unit Labor Requirements Cloth Widgets Home 10 20 Foreign 60 30 a. Neither country has a comparative advantage. b. Home has a comparative advantage in cloth. c. Foreign has a comparative advantage in cloth. d. Home has a comparative advantage in widgets. e. Home has a comparative advantage in both products. 2. Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour. Production costs would be lower in the United States as compared to Japan if a. U.S. labor productivity equaled 40 units per hour and Japan’s 15 units per hour. b. U.S. productivity equaled 30 units per hour whereas Japan’s was 20. c. U.S. labor productivity equaled 20 and Japan’s 30. d. U.S. labor productivity equaled 15 and Japan’s 25 units per hour. e. None of the above. 3. International trade has strong effects on income distributions. Therefore, international trade 2
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4. If Australia has relatively more land per worker, and Belgium has rela- tively more capital per worker, then if trade were to open up between these two countries,
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