ECON231-quiz1-002 - 1),a7%%increase...

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1) In the specific factors model, a 7% increase in the price of food accompanied by a 5% increase  in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the  fixed factor in the production of food, and ________ in the welfare of the fixed factor in the  production of cloth. a) an ambiguous change; a decrease; an increase b) an ambiguous change; an ambiguous change; an ambiguous change c) a decrease; an ambiguous change; an ambiguous change d) an increase; a decrease; an increase e) an ambiguous change; an increase; a decrease. 2) Refer to the production possibility graph above. Assume that the economy is in equilibrium at  point e. If the labor supply increases due to immigration, the new equilibrium is most likely to be a) point h. b) point f. c) point d. d) point e. 3) Refer to the production possibility graph above. Assume that the economy is in equilibrium at  point e. If the price of good A increases, the new equilibrium is most likely to be a) point b b) point e. c) point f. d) point h. e) point d. 4) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of  food. When the central city, Mudhole, puts in an airstrip, the country is able to engage in trade. If  the relative price of cloth in the outside world is 3 units of food, then Moribundia will export 
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This note was uploaded on 10/26/2011 for the course ECON 231 taught by Professor Rus during the Fall '08 term at Waterloo.

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ECON231-quiz1-002 - 1),a7%%increase...

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