364 Exam L0101

# 364 Exam L0101 - IMPORTANT Place your NAME and ID NUMBER on your scantron form Economics 364H1F Fall 2009 Professor Peter Morrow Exam 1 October

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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- Toronto.

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364 Exam L0101 - IMPORTANT Place your NAME and ID NUMBER on your scantron form Economics 364H1F Fall 2009 Professor Peter Morrow Exam 1 October

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