Exam_1__key_ - Name_ PID_ EC 340 Exam 1 February 17, 2011...

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Name_______________________ PID_________________________ EC 340 Exam 1 February 17, 2011 Instructions Do not open the exam until instructed to do so. Answer all 41 questions, each has equal weight. Circle the letter of the alternative that best answers the question. You may NOT use calculator, notes, book, or any outside source of information.
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1. Moving from autarky to trade frequently benefits some individuals and harms others. One way of dividing the population of those affected by trade is to classify individuals as either producers or consumers. Suppose that with trade, the U.S. exports wheat to Brazil, importing beef in return. Who benefits from this type of trade? a. U.S. consumers of beef. 2. In perfectly competitive markets, exports tend to increase consumer surplus. a. False 3. In perfectly competitive markets, exports tend to increase both producer and consumer surplus, but the increase in producer surplus is typically larger than the increase in consumer surplus. a. False Use the following information to answer questions 4 – 9. Assume that the market for wool socks is perfectly competitive. The diagram to the right shows the ordinary demand and supply curves for that characterize the U.S. market for wool socks.
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In the absence of international trade in wool socks, what will be the price of wool socks in the United States? a. 20 5. If the United States could trade wool socks freely with the rest of the world at a price of $14, how many wool socks would be produced in the United States? a. 2 6. If the United States could trade wool socks freely with the rest of the world at a price of $14, how many wool socks would be purchased in the United States? a. 12 7. If the United States could trade wool socks freely with the rest of the world at a price of $14, how many pair of wool socks would the United States import? a. 10 8. If the United States could trade wool socks freely with the rest of the world at a price of $14, how many pair of wool socks would the United States export? a.
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Exam_1__key_ - Name_ PID_ EC 340 Exam 1 February 17, 2011...

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