Final - Name: Student ID: Economics 161 Fall 2010...

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Name: Student ID: Economics 161 — Fall 2010 International Integration of Latin American Economies Final Exam June 8, 2010 Time: 120 minutes Total score: 120 points Carefully read the instructions of each question. Words in bold indicate that you need to respond to the request or question. If you answer with “yes” or “no”, also provide an explanation. Student Consent For Release Of Student Information (Buckley Waiver) I hereby authorize the UCSD Economics Department to return my graded ex- amination by placing it in a location accessible to all students in the course. I understand that the return of my examination as described above may result in disclosure of personally identifiable information, which is not public information as defined in UCSD PPM 160-2, and I hereby consent to the disclosure of such information. Signature Date 1
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Name: Student ID: 1 Comparative Advantage: 10 minutes When employing its full labor force, Peru can produce either 300,000 computers a year or 6 million roses, or a mix of the two. When employing its full labor force, Canada can produce either 600,000 computers or 9 million roses, or a mix of the two. State the equation for the production possibility frontier (PPF) of Peru. What is the slope of Peru’s PPF? Which country has the absolute advantage in producing computers, and why? Which country has the absolute advantage in producing roses, and why? Which country has the comparative advantage in producing computers, and why? Which country has the comparative advantage in producing roses, and why? 2
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Name: Student ID: 2 Balassa Measure: 10 minutes Explain the Balassa measure of comparative advantage BADV i,t X Country i,t / k X Country k,t X World i,t / k X World k,t . Does it properly identify a country’s products or industries with the strongest comparative advantage? Why ? State a reason why it might not properly rank a country’s products or industries with the weakest comparative advan- tage (strongest disadvantage). 3
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Student ID: 3 Multinational Firms: 10 minutes Explain the Hold-Up problem when a supplier needs to incur a specific invest- ment to meet a client’s product specifications. Does the formation of multinational companies through foreign direct in- vestment offer a solution? Do perfectly enforceable contracts in a comprehensive court system offer a solution? 4
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Final - Name: Student ID: Economics 161 Fall 2010...

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