2012 Practice Exam - Spring 3012 Econ 306 International...

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Unformatted text preview: Spring 3012, Econ 306, International Trade, Exam 1. Instructor: J. A. Freeman Mitt/2012 Name: Honor Code: I“l have abidcd by the Wheaton College Honor Code in thls work.“ Signature: Suppose that US is a skilled labor abundant nation and EU is a capital abundant nation. . Also assume that medical instruments (Ml) are skilled labor-intensive goods while Pharmaceuticals drugs (Rs) are capital-intensive goods. recording to the factor-endowment (HO) model. U.S. will have comparative advantage in me ical instruments. while EU will have comparative advantage in Pharmaceutical drugs (Rx). 1n the short run. skilled labor is specific to the medical instruments and Pharmaceutical drugs industries in the US but Wmo.bile across industries in US. , _.,.. "T: WW tn VWN . Usmg the SW explain the effects ol‘tradc on t e real Incomes (ifsklllcd labor in the medical instrument industry. skilled labor in the Pharmaceutical drugs industry. and owners of capital in U.S. Use a graph and the Value of Marginal Product theory (VMP) to illustrate and explain the 0 effect of trade on real incomes (purchasing power) of skilled labor in the medical instrument industry, skilled labor in the Pharmaceutical industry. and owners of capital in US. [25%] Answer Question 2 or 3 2. in the long run. both capital and skilled labor are mobile across industries in the U.S. According to the H—0 model and Stopler—Samuelson Theorem (Long run). explain which a F factors in the US will gain (i.c.. experience an increase in their purchasing power) from the 1. .\i- ‘ XUS- EU trade? gttttrtw SE UAR Halli/Lint (l )ilttfio‘lw .I that”? - MI (Qifltll’d— 'C ii \ Yvh Explain which factors inthe will lose i.c., cxpericn cereasc in their urchasing " lo-Iinl') power) from the US -EU trade- [25%] I ..u3n%u3 0' -t in Jul CUitV-tfllxr A an ill! E. ‘- M L )(J ,_ - . A _ (_ -- 0R W (Cu/VI Al li‘l‘l‘CUlrlvc 3 3. Briefly explain why the Ricardian model oi'comparativc advantage (RCA) and the lleekshcr- Ohlin model of factor endowment (HO) cannot adequately explain intro-industry trade in Pharmaceuticals (Rs) between the U.S. and EU. Discuss other models/theories of international trade that better explain intra-indnstry trade in Rx between the U.S. and EU? [25 %] .._ _ ._ _ _—__ .____.__._.—_——-_——__-—I_-—__._ Answer questions 4 and 5 4. (fitical lit-View in the Fall Nil-t .ltii‘ article. titled “The Muddles over Outsourcing.“ Professors Bhagwan. Pateeariya and Stinit'asan explain how the definition of outsourcing often ntuddlcs the . ‘ different modes in trades in setwices: present evidence ot‘US. job losses due to outsourcing. and use three models to analyze the effects of outsourcing and increased skill accumulauon in ludia and China on wages and employment in the U.S. Write a 200 to 3m word critical review in which you analyze and summarize the authors' main arguments. points and conclusion. Your review should include the following: estimates of US. job losses due to outsourcing: analysis of the effect of outsourcing on US. wages and employment using the three models: and the effects of increased skill accumulation in China and India on 1.1.5. wages and employment using the three models. [25%] a a. Welfare effects of :1 Tariff. Using. the attached graph. esplaificm. and label on the graph tthetlistfi'bnfii-e effect.mflvreffilct. effectdermsof‘t-rade effect. andimfirremue effect ot‘an automobile tariff imposed by the U.S. Assume that the U.S. automobile tariff is a large country tarifl‘tnodel. What is the net dentin-eight loss or welfare loss due to the automobile tariff? s the tariff an optimal tariff? Explain briefly. [25 9%] .— Retttzgtvammn. - n: WW Fl) wet/«mm so Gus“ . tom Bengt/clothe in in: (in 'C. 69"” -lt’{iCl~k’v'tUb6 o LJVWV'DI‘LX’ Col/v 40W u‘mtsh'vyl 5 Lo 5 Timed; .Q, tbl'l Tint Veda/ttitih-lx in Wfiytfl'i 9.03 no fibl‘t‘jalm‘ Prefikwm 00h Vb’filftwl, “lb hem. 0c WM at Jamil) (Lnb‘dtl' Prim 1% YV'DAAm) mi: Wt [DES in Mite-waters Q'Witlpus i haul- is {YMMV-1111’ in list GBDlIl ll avenues) 3mm Shi’nfih Lkififli ... fl Hf (A’W‘i d ; LOG"? [M [‘ifihchEEt: gwlfiiit‘thttk’nh‘x ”I" an. lit {AWL Freda/«ohm \fiwm J M L l "M L U M t” Y t“ otWrUi-‘i “' Wh$mwt 1'5““ " 1 lilo-Elia )t't,-t‘.t.:.ttiduuo\, Del-tfi’bttnilfi’tiflx (0,1in in l Spring 2011. Econ 306, International Trade, Exam 1. Instructor: J. A. Freeman 3106/12 Name Large Country Tariff Effect 2. 6 12 16. Quantity of Autos (millions) : 4 / "214127. 7""+C3P /" ’5 he IL 625’s “ Z‘ _ {-3 (~62 < ~59 ”d5“? ’07 GK *1) f 732(4)le filigrnq/ ‘ (1‘ (c— + 4K (/2: ma >4 [9 :. r01 L 'l‘. It ...
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