Fall2010test2A-answers

Fall2010test2A-answers - ECON 460: Fall 2010 Test 2A In my...

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ECON 460: Fall 2010 Test 2A In my honor, I have neither given nor received unauthorized aid on this test: ______________ Name:____________________________________________ Section: Multiple Choice Questions (3 points each) 1. The situation in United States whereby an import good faces a lower tariff if the good comes from a developing country than if the good comes from a developed country is known as __________. a . Generalized System of Preferences treatment b. MFN (or NTR) treatment c. Domestic Content Provisions treatment d. Offshore Assembly Program treatment 2. Given the following information for industry X in country A, and assuming that input Y is imported, that one unit of Y is required for each unit of X, free trade price nominal tariff rate final product X $100 20% input Y (only input to X) $ 80 15% the effective rate of protection (ERP) for industry X is ___ percent. a. 17½ b. 35 c. 40 d. 22.5 3. Which one of the following is NOT an assumption made in the standard 2x2x2 Heckscher-Ohlin analysis? a. The production function for a given good is the same in both countries. b. If a particular good is the relatively labor-intensive good at one set of relative factor prices, then it is also the relatively labor-intensive good at any other set of relative factor prices. c. A given relative commodity price ratio, say (P X /P Y ) 1 , can be associated with more than one relative factor price ratio, e.g., say with (w/r) 1 as well as with (w/r) 2 . d. Tastes and preferences (i.e., the community indifference curve maps) are identical in 1
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the two countries. 4. If two countries remove all tariff and nontariff barriers to trade between them, adopt a common external tariff on imports from the outside world, and permit free factor movements between themselves, but take no further steps toward economic integration, this economic coalition that has been formed is a a. free-trade area.
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Fall2010test2A-answers - ECON 460: Fall 2010 Test 2A In my...

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