MGMT 407.11 Spring 2009 EXAMINATION 1 Dr. Ericson Name________________ This is an open-book and open-notes examination. Write answers on a separate sheet of paper. Show work for partial credit; assume your answers are wrong. In multipart questions you may assume your prior answers are correct. 1. (75 points and 30 minutes) Suppose both Ghana and Morocco can produce both nutmeg and wireless phones. Ghana takes 4 days to produce a nutmeg and 6 days for a wireless phone. Morocco 5 days to make a nutmeg and 8 days for a wireless phone. (15) a. Create the corresponding opportunity-cost table. (5) b. Following comparative advantage, in what will each country specialize? For questions "c" to "e" use the number of wireless phones to be traded for one nutmeg. (5) c. What is the range of phones-per-nutmeg for mutually-beneficial trade? (30) d. Show by the fixed-consumption route that both countries will benefit from trade for some rate in the range. (20)
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