Practice Midterm II Solutions(1)

Practice Midterm II Solutions(1) - salaries of the teachers...

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Practice Midterm II Solutions Question 1 (a) Natural resource abundance raises the return to unskilled labor, discouraging people from accumulating human capital (education) and thereby slowing growth. There is evidence that countries abundant in natural resources have lower school enrollment rates. (b) Removing protection from foreign competition means lowering taxes on imports. These taxes were easy to collect (compared to income taxes, for example), so it was hard for governments to replace the lost revenue with other taxes. Question 2 (a) Detailed studies of firms over time show that exporting firms had high productivity before they began to export. This contradicts the explanation that firms learned to be productive by exporting (b) i. r = Y 1 - Y 0 S ( Y 0 + C ) , where Y 1 = 3400, Y 0 = 1900, S = 5, C = 100. r = 3400 - 1900 5(1900 + 100) = 15% ii. The private return exceeds the social return because students did not have to pay the
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Unformatted text preview: salaries of the teachers. Question 3 (a) difference for weekly program = 5 . 2-4 . 1 = 1 . 1 difference for monthly program = 4 . 5-3 . 9 = 0 . 6 1 difference in difference = 0 . 5 difference in cost between weekly and monthly program = $5 /student reduction in births per dollar = 0 . 5 / 5 = 0 . 1 (b) i. Expected sex ratio = 1, so 21 million females are expected. 21-20 = 1 million females missing. 1 / 20 = 5% of females are missing. ii. Women live longer than men, so countries with older populations will have lower ratios of males to females even if they do not treat girls better than countries with younger populations. iii. We would like to know the sex ratio at birth. If it is the same as ”expected”, this favors the neglect explanation over the abortion explanation. 2...
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