Exam _2 _Fall 2007_ - Name: _ (Last name, first name) SID:...

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Fall 2007 1/14 Name: _________________________ (Last name, first name) SID: _________________________ UGBA 118 International Trade Professor Steven Wood Fall 2007 Exam #2 Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test until after 3:30 p.m. on December 19, 2007. ______________________ Signature Any test turned in without a signature indicating that you have taken this oath will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: 1. Completely , clearly and accurately label all axis, lines, curves, and equilibrium points. 2. The original diagram and equilibrium points MUST be drawn in black or pencil. 3. The first shift of any line(s) and the new equilibrium points MUST be drawn in red. 4. The second shift of any line(s) and new equilibrium points MUST be drawn in blue. Do NOT open this test until instructed to do so. Good Luck!
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Fall 2007 3/14 A. Multiple Choice Questions . Circle the letter corresponding to the best answer (4 points each; total of 60 points.) 1. If some industries exhibit internal increasing returns to scale in each country, we should NOT expect to see: a. Intra-industry trade between countries. b. Perfect competition in these industries. c. Inter-industry trade between countries. d. High levels of specialization in both countries. e. None of the above. 2. A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries and these two countries engage in trade with one another, then we would expect: a. The country in which the price of the product is lower will export the product. b. The country with a relative abundance of the factor of production in which production of the product is intensive will export this product. c. Each of the countries will export different varieties of the product to the other. d. Neither country will export this product since there is no comparative advantage. e. None of the above. 3. If the world attained a perfect Heckscher-Ohlin model equilibrium with trade, then: a. Workers in the labor abundant country would migrate to the capital abundant country. b. Workers in the labor abundant country would wish to migrate to the capital abundant country. c.
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Exam _2 _Fall 2007_ - Name: _ (Last name, first name) SID:...

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