# Exam 1 - IMPORTANT: Place your NAME, FORM NUMBER and ID...

This preview shows pages 1–4. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Multiple Choice (57 Points) 1) Suppose that consumers in each country possess the utility function U = D W 1/ 7 D C 6/ 7 where D W is consumption of wine and D C is consumption of clothing. The equation for the relative demand curve will be a. p c p w = 6 D W D C ae è ç ö ø ÷ b. p w p c = 6 D W D C ae è ç ö ø ÷ c. p c p w = 1 6 D W D C d. p w p c = 1 6 D W D C e. p w p c = D W D C 2) The article “Ricardo’s Difficult Idea” is written by: a. Paul Krugman b. Paul Krugman and Maurice Obstfeld c. Lawrence Summers d. Martin Wolff. e. Dani Rodrik 3) Suppose that there are two countries (A&B) and two industries. Output per worker is 22.5 in a given industry for two countries. Under the Ricardian model, this implies that a. Country A possesses a comparative advantage in the other industry. b. Country B possesses a comparative advantage in the other industry. c. No country possesses a comparative advantage. d. Another country must possess an absolute advantage in the other industry. e. We cannot make any statements based on the data given. 4) The Ricardian model differs from the Heckscher-Ohlin model in that it a. assumes that there is more than one factor of production. b. assumes that there are more than two goods. c. emphasizes productivity differences. d. cannot explain differences in wages across countries. e. does not make predictions about the pattern of trade.
5) Observe the Lerner diagram below where a country producers two goods: computers and textiles. Given the iso-value (CC & TT for computer and textiles, respectively) and iso-cost curves below, subsequently we are likely to observe: a. firm entry in the computer sector. b. firm exit in the textile sector.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 03/27/2011 for the course ECO 364 taught by Professor Petermorrow during the Fall '10 term at University of Toronto- Toronto.

### Page1 / 10

Exam 1 - IMPORTANT: Place your NAME, FORM NUMBER and ID...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online