364 Exam SOLUTIONS

# 364 Exam SOLUTIONS - IMPORTANT: Place your NAME and ID...

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1 IMPORTANT: Place your NAME and ID NUMBER on your scantron form. Economics 364H1F, Fall 2009 Professor Peter Morrow Exam 1 October 26th, 2009 Monday 2:10pm-4:00pm FORM 1 Fill in the information below: Name______________________________ Student ID _________________________ INSTRUCTIONS 1. Do not open this exam until you are told to do so. STOP work immediately when told to do so. 2. If you are not taking the exam in your assigned section, fifteen (15) points will be deducted. 3. Place your NAME and ID NUMBER on your scantron form. 4. This exam has 100 points and is in two parts: Multiple Choice (17 questions @ 3 points each=51 total points) and a Long Question (49 total points). For all questions, there is no penalty for guessing. 5. For the multiple choice section, if more than one answer seems plausible choose the best or most likely answer. 6. For the long question, box your final answer. 7. Your scantron will not be returned to you. Be sure to mark your answers on the exam booklet so that you will later have a record of your answers. 8. You are allowed to use simple (non-programmable) calculators. Programmable calculators are forbidden. Cell phones, blackberrys, PDA’s, IPODs, and all devices that can contain programmable information are forbidden. 9. Do not cheat. If you are caught cheating, I will penalize you to the greatest extent allowed by the University. Possession of any forbidden item will be construed as cheating. 10. There are eleven pages in this exam. Make sure you have all of them. The pages are numbered. GOOD LUCK!

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2 1) Suppose that we observe a consumer with the utility function U = C 0.33 W 0.66 where C is consumption of cars and W is consumption of wine. If the relative price of cars to wine is 10, what will be the ratio of cars to wine consumed? a) 20 b) 10 c) 1 d) 1/10 e) 1/20 2) In the Heckscher-Ohlin model the opportunity cost of producing another unit of output of one good ________ as that country produces more of that good. In the Ricardian model, this opportunity cost ____________. a) increases, increases b) increases, is constant c) is constant, increases d) is constant, constant e) is increases, decreases 3) Suppose that we observe a Heckscher-Ohlin world with two factors of production: land and labor. Suppose that Canada is relatively land abundant and that the United States is relatively labor abundant. For “everyone” to gain from a movement from autarky to free trade, there must be transfer payments from ____________ to ____________ in Canada and from _____________ to _____________ in the United States. a) land owners, labor, labor, land owners b) labor, land owners, land owners, labor c) land owners, labor, land owners, labor d) labor, land owners, labor, land owners e) labor, labor, land owners, land owners 4) Suppose that we observe the equilibrium of the Ricardian model illustrated below. Which of the following statements will be true in a free trade equilibrium? a) The South will produce one good.
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## 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.

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364 Exam SOLUTIONS - IMPORTANT: Place your NAME and ID...

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