E452exs2S10

E452exs2S10 - Name SECOND MIDTERM EXAM Economics 452...

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Name SECOND MIDTERM EXAM Economics 452 International Trade Theory and Policy Spring 2010 1 HECKSCHER-OHLIN MODEL 1-4 Haiti is relatively scarce in land to labor compared to the ROW. Food production relatively intensively uses land to labor compared to cloth. Haiti is assumed to have the same technology and relative demand as the ROW. 1. Under free trade, Haiti produces more _____ than the ROW. a) food b) cloth c) food relative to cloth d) cloth relative to food e) cannot tell from the information provided 2. Haiti has comparative advantage in a) food b) cloth c) both food and cloth d) neither food nor cloth e) cannot tell from the information provided 3. Under free trade, Haiti exports a) food b) cloth c) both food and cloth d) neither food nor cloth e) cannot tell from the information provided 4. An decrease in labor in Haiti causes their production of a) food to fall b) cloth to fall c) food to rise and cloth to fall d) cloth to rise and food to fall e) both food and cloth to fall
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2 5-8 Haiti is relatively scarce in land to labor compared to the ROW. Haiti and the ROW produce both cloth and food. They are assumed to have the same technology and relative demand. Cloth is relatively intensive in labor. As move from autarky to free trade, the relative price of cloth to food rises in Haiti and falls in the ROW. 5. In Haiti, the wage paid to workers: a) rises by more than the price of goods b) rises by less than the price of goods c) stays the same d) falls by less than the price of goods e) falls by more than the price of goods 6. In Haiti, the rent paid to landowners: a) rises by more than the price of goods b) rises by less than the price of goods c) stays the same d) falls by less than the price of goods e) falls by more than the price of goods 7. Under free trade, the rent paid to landowners in Haiti is a) higher than the rent in the ROW b) lower than the rent in the ROW c) the same as the rent in the ROW d) the same as the wage in the ROW e) the same as the wage in the Haiti 8. In Haiti, who is hurt by free trade? a) workers b) landowners c) both workers and landowners d) no one - both workers and landowners gain in Haiti e) depends on how workers and landowners spend their income
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3 STANDARD TRADE MODEL 9-12 Free trade prevails between the United States and Haiti. Suppose Haiti experiences a contraction (negative economic growth due to the earthquake) that causes their production of food to shrink relative to their production of cloth, while the United States has zero economic growth. 9.
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This note was uploaded on 02/13/2012 for the course ECON 452 taught by Professor Vacaflores during the Spring '06 term at Texas A&M.

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E452exs2S10 - Name SECOND MIDTERM EXAM Economics 452...

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