final-eco101-09

final-eco101-09 - Name: Student ID: Economics 101 Fall 2009...

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Name: Student ID: Economics 101 — Fall 2009 International Trade Final Exam December 10, 2009 Time: 110 minutes Total score: 110 points Carefully read the instructions of each question. Words in bold indicate that you need to respond to the request or question. Whatever you answer, also provide a brief explanation. I hereby authorize the UC San Diego Economics Department to return my graded exam- ination 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 UC San Diego PPM 160-2, and I hereby consent to the disclosure of such information. Name Date 1
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Name: Student ID: 1 Trade of Multiple Goods: 10 minutes Unit labor requirements for Home (no asterisk) and Foreign (asterisk) are given by Home Foreign Aluminum a LA = 6 a * LA = 2 Beef a LB = 3 a * LB = 2 Cars a LC = 2 a * LC = 3 Diamonds a LD = 1 a * LD = 2 Rank the goods in terms of Home’s comparative advantage. Let the international wage ratio w/w * vary between .5 and 1. Which good(s) does Home import if the wage ratio w/w * is .5, which good(s) does Home import if the wage ratio w/w * is 1? Now suppose trade costs add 50% to the cost of each good when shipped. Let the international wage ratio w/w * vary between .5 and 1 again. Which good(s) does Home import if the wage ratio w/w * is .5, which good(s) does Home import if the wage ratio w/w * is 1? 2
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Name: Student ID: 2 Heckscher-Ohlin and Labor Skills: 10 minutes There are two trading countries, two factors of production, and two industries. The two factors of production are low-skilled and high-skilled labor. The two industries are cars and footwear. The Home country is relatively high-skill abundant. The car industry is high-skill inten- sive while footwear is low-skill intensive. What good will Home export if it is open to free trade? Low-skill migrants from a third country increase the home-country low-skill labor force by one-fifth, but there is no migration into the Foreign trading country. High-skill education policies raise the amount of high-skilled labor by one-fifth in the Home country, but there is no change to the high-skill endowment in the Foreign trading country. What good will Home export now if it is open to free trade? How
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final-eco101-09 - Name: Student ID: Economics 101 Fall 2009...

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