midterm2-eco101-09

midterm2-eco101-09 - Name: Student ID: Economics 101 Fall...

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Unformatted text preview: Name: Student ID: Economics 101 Fall 2009 International Trade Second Midterm Exam November 5, 2009 Time: 70 minutes Total score: 70 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 Name: Student ID: 1 Standard Trade Theory: 10 minutes Consider a standard classic trade model with varying opportunity costs. The production possibility frontier of the Home country is depicted below. What is the slope of the world trade line, P F /P C or P C /P F . What good does the home country import? Show in the diagram that a deterioration in the home countrys terms of trade will worsen the home countrys welfare (utility). Home food output H o m e c l o t h s o u t p u t Q C Q F PPF Utility 2 Name: Student ID: 2 Intra-industry Trade: 10 minutes Consider an Intra-industry Trade model. Varieties of the goods are produced under internal economies of scale but with constant marginal cost c . Contrary to the model in class, suppose that all firms sell at a constant markup over marginal cost. In other words, in equilibrium all firms get to charge a price that is a constant percentage higher than marginal cost, irrespective of the firms own scale and the number...
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midterm2-eco101-09 - Name: Student ID: Economics 101 Fall...

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