Second Midterm Solutions(1)

Second Midterm Solutions(1) - Econ 116 - Second Midterm...

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Econ 116 - Second Midterm Exam - Fall 2011 Solutions - 50 Points Possible 1. (20 points) (a) Exporting to more developed countries requires not only competitive costs, but high quality (5 points). Faster, less corrupt courts can help exporters enforce contracted quality standards on their suppliers (5 points). (b) A competitive relationship (i.e, where the subsidiaries and domestic firms compete for the same customers) is harmful, since it reduces market share of the domestic firms (5 points). A subcontracting relationship (i.e, where the subsidiaries buy imports from the domestic firms) is beneficial, because the subsidiaries transfer technology to the domestic firms in order to get cheaper and higher quality inputs (5 points). 2. (14 points) (a) Monitoring was improved by installing cameras with tamper-proof date and time stamps that teachers used to prove they were present, along with the students, at the be- ginning and end of the school day (3 points). Incentives were improved by paying teachers
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Second Midterm Solutions(1) - Econ 116 - Second Midterm...

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