ECON231_Assignment2_F11_Sol

ECON231_Assignment2_F11_Sol - ECON 231 Section 2...

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ECON 231 – Section 2 Introduction to International Economics Instructor: Sharif F. Khan Department of Economics University of Waterloo Fall 2011 Suggested Solutions to Assignment 2 (Optional) Total Marks: 30 marks Part B True/ False/ Uncertain Questions Explain why the following statement is True, False, or Uncertain according to economic principles. Use diagrams and / or numerical examples where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. Each question is worth 5 marks. B1. The production possibility frontier (PPF) in the specific factors model is a downward sloping straight line. False The production possibility frontier (PPF) in the specific factors model is a downward sloping bowed-out (concave) curve. See Figure 4-3 and Pages 54-56 of Chapter 4 of the textbook (9 th ed.) for an explanation. B2. In the specific factors model when an economy opens up to trade, it exports the good whose relative price has increased. True.
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ECON231_Assignment2_F11_Sol - ECON 231 Section 2...

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