SOLUTIONS TO TEXT PROBLEMS:
|
|
- Caroline Carr
- 5 years ago
- Views:
Transcription
1 44 Chapter 3/Interdependence and the Gains from Trade SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes The answers to the Quick Quizzes can also be found near the end of the textbook. 1. Figure 1 shows Robinson Crusoe s production possibilities frontier for gathering coconuts and catching fish. If Crusoe lives by himself, this frontier limits his consumption of coconuts and fish, but if he can trade with natives on the island, he will possibly be able to consume at a point outside his production possibilities frontier. Figure 1 2. Crusoe s opportunity cost of catching one fish is 10 coconuts, since he can gather 10 coconuts in the same amount of time it takes to catch one fish. Friday s opportunity cost of catching one fish is 15 coconuts, since he can gather 30 coconuts in the same amount of time it takes to catch two fish. Friday has an absolute advantage in catching fish, since he can catch two per hour, while Crusoe can catch only one per hour. But Crusoe has a comparative advantage in catching fish, since his opportunity cost of catching a fish is less than Friday s. 3. If the world s fastest typist happens to be trained in brain surgery, he should hire a secretary because the secretary will give up less for each hour spent typing. Although the brain surgeon has an absolute advantage in typing, the secretary has a comparative advantage in typing because of the lower opportunity cost of typing. Questions for Review 1. Absolute advantage reflects a comparison of the productivity of one person, firm, or nation to that of another, while comparative advantage is based on the relative opportunity costs of the persons, firms, or nations. While a person, firm, or nation may have an absolute advantage in producing every good, they cannot have a comparative advantage in every good. 2. Many examples are possible. Suppose, for example, that Roger can prepare a meal of hot dogs and macaroni in just ten minutes, while it takes Anita 20 minutes. Also suppose that Roger can do all the laundry in three hours, while it takes Anita four hours. Roger has an absolute
2 Chapter 3/Interdependence and the Gains from Trade 45 advantage in both cooking and doing the laundry, but Anita has a comparative advantage in doing the laundry. For Anita, the opportunity cost of doing the laundry is 12 meals; for Roger, it is 18 meals. 3. Comparative advantage is more important for trade than absolute advantage. In the example in problem 2, Anita and Roger will complete their chores more quickly if Anita does at least some of the laundry and Roger cooks the meals for both, because Anita has a comparative advantage in doing the laundry, while Roger has a comparative advantage in cooking. 4. A nation will export goods for which it has a comparative advantage because it has a smaller opportunity cost of producing those goods. As a result, citizens of all nations are able to consume quantities of goods that are outside their production possibilities frontiers. 5. Economists oppose policies that restrict trade among nations because trade allows all countries to achieve greater prosperity by allowing them to receive the gains from comparative advantage. Restrictions on trade hurt all countries. Problems and Applications 1. a. See Figure 2. If Maria spends all five hours studying economics, she can read 100 pages, so that is the vertical intercept of the production possibilities frontier. If she spends all five hours studying sociology, she can read 250 pages, so that is the horizontal intercept. The opportunity costs are constant, so the production possibilities frontier is a straight line. Figure 2 b. It takes Maria two hours to read 100 pages of sociology. In that time, she could read 40 pages of economics. So the opportunity cost of 100 pages of sociology is 40 pages of economics.
3 46 Chapter 3/Interdependence and the Gains from Trade 2. a. Workers needed to make: One T-shirt One Dozen Brownies U.S. 1/10 1/18 Mexico 1/10 1/10 b. See Figure 3. With 1 million workers and 10 T-shirts per worker, if either economy were devoted completely to T-shirts, it could make 10 million T-shirts. Because a U.S. worker can produce 18 dozen brownies, if the United States produced only brownies it would produce 18 million dozen. Because a Mexican worker can produce 10 dozen brownies, if Mexico produced only brownies it would produce 10 million dozen. These are the intercepts of the production possibilities frontiers shown in the figure. Note that because the trade-off between T-shirts and brownies is constant for both countries, the production possibilities frontiers are straight lines. Figure 3 c. Because a U.S. worker produces either 10 T-shirts or 18 dozen brownies, the opportunity cost of one T-shirt is 1 4/5 dozen brownies, which is 18 divided by 10. Because a Mexican worker produces either 10 T-shirts or 10 dozen brownies, the opportunity cost of one T-shirt is one dozen brownies, which is 10 divided by 10. Similarly, the U.S. opportunity cost of one dozen brownies is 5/9 T-shirt (10 divided by 18) and the Mexican opportunity cost of one dozen brownies is 1 T-shirt (10 divided by 10). This results in the following table:
4 Chapter 3/Interdependence and the Gains from Trade 47 Opportunity Cost of: One T-shirt (in terms of dozens of brownies given up) One Dozen Brownies (in terms of T-shirts given up) U.S. 1 4/5 5/9 Mexico 1 1 d. Neither country has an absolute advantage in producing T-shirts, because they are equally productive (the same output per worker); the United States has an absolute advantage in producing brownies, because it is more productive (greater output per worker). e. Mexico has a comparative advantage in producing T-shirts, because it has a lower opportunity cost in terms of brownies given up. The United States has a comparative advantage in producing brownies, because it has a lower opportunity cost in terms of T- shirts given up. f. With half the workers in each country producing each of the goods, the United States would produce 5 million T-shirts (500,000 workers times 10 T-shirts each) and 9 million dozen brownies (500,000 workers times 18 dozen each). Mexico would produce 5 million T-shirts (500,000 workers times 10 T-shirt each) and 5 million dozen brownies (500,000 million workers times 10 dozen each). g. From any situation with no trade, in which each country is producing some T-shirts and some brownies, suppose the United States changed one worker from producing T-shirts to producing brownies. That worker would produce 10 fewer T-shirts and 18 additional dozen brownies. Then suppose the United States offers to trade eight dozen brownies to Mexico for five T-shirts. The United States will do this because it values five T-shirts at nine dozen brownies, so it will be better off if the trade goes through. Mexico will take the trade because it values five T-shirts at five dozen brownies, so it will be better off. Thus, by trading and changing their production, both countries are better off. 3. a. Martha s opportunity cost of knitting a scarf is two dozen meatballs. Martha has an absolute advantage in knitting a scarf because she can make one in two hours, while it takes Stewart three hours. Stewart s opportunity cost of knitting a scarf is one and one half dozen meatballs. Because Stewart s opportunity cost of knitting a scarf is less than Martha s, Stewart has a comparative advantage in knitting scarves. b. Because Stewart has a comparative advantage in knitting scarves, he will knit scarves and exchange it for meatballs that Martha makes. c. The highest price of a scarf in terms of meatballs that will make both spouses better off is 2 dozen meatballs. If the price were higher than that, then Martha would prefer knitting her own scarf (at an opportunity cost of two dozen meatballs) rather than trade for a scarf that Stewart makes. The lowest price of a scarf in terms of meatballs that will make both spouses better off is one and one half dozen meatballs. If the price were lower than that, then Stewart would prefer making his own meatballs (he can make one and one-half dozen instead of knitting a scarf) rather than trading for meatballs that Martha makes.
5 48 Chapter 3/Interdependence and the Gains from Trade 4. a. Because a Canadian worker can make either two cars a year or 30 bushels of wheat, the opportunity cost of a car is 15 bushels of wheat. Similarly, the opportunity cost of a bushel of wheat is 1/15 of a car. The opportunity costs are the reciprocals of each other. b. See Figure 4. If all ten million workers produce two cars each, they produce a total of 20 million cars, which is the vertical intercept of the production possibilities frontier. If all ten million workers produce 30 bushels of wheat each, they produce a total of 300 million bushels, which is the horizontal intercept of the production possibilities frontier. Because the trade-off between cars and wheat is always the same, the production possibilities frontier is a straight line. If Canada chooses to consume ten million cars, it will need five million workers devoted to car production. That leaves five million workers to produce wheat, who will produce a total of 150 million bushels (five million workers times 30 bushels per worker). This is shown as point A on Figure 4. c. If the United States buys 10 million cars from Canada and Canada continues to consume 10 million cars, then Canada will need to produce a total of 20 million cars. So Canada will be producing at the vertical intercept of the production possibilities frontier. However, if Canada gets 20 bushels of wheat per car, it will be able to consume 200 million bushels of wheat, along with the 10 million cars. This is shown as point B in the figure. Canada should accept the deal because it gets the same number of cars and 50 million more bushes of wheat. Figure 4 5. a. Italian workers have an absolute advantage over Greek workers in producing bread, because Italian workers produce more loaves per hour (10 vs. 8). Greek workers have an absolute advantage over Italian workers in producing olive oil, because Greek workers produce more olive oil per hour (8 bottles vs. 5 bottles). Comparative advantage runs the same way. Italian workers, who have an opportunity cost of 1/2 bottle of olive oil per loaf of bread (5 bottles of olive oil per hour divided by 10 loaves of bread per hour), have a comparative advantage in bread production over Greek workers, who have an
6 Chapter 3/Interdependence and the Gains from Trade 49 opportunity cost of 1 bottle of olive oil per loaf of bread (8 bottles of olive oil per hour divided by 8 loaves of bread per hour). Greek workers, who have an opportunity cost of 1 loaf of bread per bottle of olive oil (8 loaves per hour divided by 8 bottles per hour), have a comparative advantage in the production of olive oil over Italian workers, who have an opportunity cost of 2 loaves per bottle (10 loaves per hour divided by 5 bottles per hour). b. If Italy and Greece decide to trade, Greece will produce olive oil and trade it for loaves of bread produced in Italy. A trade with a price between 1 and 2 loaves of bread per bottle of olive oil will benefit both countries, as they will be getting the traded good at a lower price than their opportunity cost of producing the good in their own country. c. Even if a Greek worker produced just 5 bottles of olive oil per hour, the countries would still gain from trade, because Greece would still have a comparative advantage in producing olive oil. Its opportunity cost for olive oil would be higher than before (1 3/5 loaves per bottle, instead of 1 loaf per bottle before). But there are still gains from trade because Italy has a higher opportunity cost (2 loaves per bottle). 6. a. With no trade, one pair of white socks trades for one pair of red socks in Boston, because productivity is the same for the two types of socks. The price in Chicago is two pairs of red socks per pair of white socks. b. Boston has an absolute advantage in the production of both types of socks, because a worker in Boston produces more (three pairs of socks per hour) than a worker in Chicago (two pairs of red socks per hour or one pair of white socks per hour). Chicago has a comparative advantage in producing red socks, because the opportunity cost of producing a pair of red socks in Chicago is one-half pair of white socks, while the opportunity cost of producing a pair of red socks in Boston is one pair of white socks. Boston has a comparative advantage in producing white socks, because the opportunity cost of producing a pair of white socks in Boston is one pair of red socks, while the opportunity cost of producing a pair of white socks in Chicago is two pairs of red socks. c. If they trade socks, Boston will produce white socks for export, because it has the comparative advantage in white socks, while Chicago produces red socks for export, which is Chicago s comparative advantage. d. Trade can occur at any price between one and two pairs of red socks per pair of white socks. At a price lower than one pair of red socks per pair of white socks, Boston will choose to produce its own red socks (at a cost of one pair of red socks per pair of white socks) instead of buying them from Chicago. At a price higher than two pairs of red socks per pair of white socks, Chicago will choose to produce its own white socks (at a cost of two pairs of red socks per pair of white socks) instead of buying them from Boston.
7 50 Chapter 3/Interdependence and the Gains from Trade 7. a. The production possibilities frontiers for the two countries are shown in Figure 5. If, without trade, a U.S. worker spends half of his time producing each good, the United States will have 100 pillows and 15 televisions. If, without trade, a worker in Pakistan spends half of his time producing each good, Pakistan will have 100 pillows and 9 televisions. Figure 5 b. For the United States, the opportunity cost of one television is 6 2/3 pillows, while the opportunity cost of one pillow is 3/20 television. For Pakistan, the opportunity cost of one television is 11 1/9 pillows, while the opportunity cost of one pillow is 9/100 television. Therefore, the United States has a comparative advantage in the production of televisions and Pakistan has a comparative advantage in the production of pillows. Pakistan would export pillows. The price of a pillow will fall between 9/100 and 15/100 of a television. An example would be a price of 10/100 television. In other words, Pakistan could export 10 pillows and receive one television in return. Both countries would benefit from trade. Pakistan would specialize in pillows (producing 200) and export 10. This would leave them with 190 pillows. In return, they would get one television. The combination of 190 pillows and 1 television was not available to Pakistan before trade. The United States could specialize in televisions (producing 30) and export one television to Pakistan in exchange for ten pillows. The United States would end up with 29 televisions and 10 pillows, a combination that was impossible without trade. c. The price of a television would fall between 6 2/3 and 11 1/9 pillows. If the price was below 6 2/3 pillows, the United States would not be willing to export televisions because the opportunity cost of a television for the United States is 6 2/3 pillows. If the price was greater than 11 1/9 pillows, Pakistan would not be willing to import televisions because (for Pakistan) the opportunity cost of a television is 11 1/9 pillows. d. Once the productivity is the same in the two countries, the benefits of trade disappear. Trade is beneficial because it allows countries to exploit their comparative advantage. If Pakistan and the United States have exactly the same opportunity cost of producing shirts and computers, there will be no more gains from trade available.
8 Chapter 3/Interdependence and the Gains from Trade a. True; two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. All that is necessary is that each country have a comparative advantage in some good. b. False; it is not true that some people have a comparative advantage in everything they do. In fact, no one can have a comparative advantage in everything. Comparative advantage reflects the opportunity cost of one good or activity in terms of another. If you have a comparative advantage in one thing, you must have a comparative disadvantage in the other thing. c. False; it is not true that if a trade is good for one person, it cannot be good for the other one. Trades can and do benefit both sides especially trades based on comparative advantage. If both sides did not benefit, trades would never occur. d. False; trade that makes the country better off can harm certain individuals in the country. For example, suppose a country has a comparative advantage in producing wheat and a comparative disadvantage in producing cars. Exporting wheat and importing cars will benefit the nation as a whole, as it will be able to consume more of all goods. However, the introduction of trade will likely be harmful to domestic autoworkers and manufacturers. 9. This pattern of trade is consistent with the principle of comparative advantage. If the United States exports corn and aircraft, it must have a comparative advantage in the production of these goods. Because it imports oil and clothing, the United States must have a comparative disadvantage in the production of these items.
2. David Ricardo's model explains trade based on: A) labor supply. B) technology. C) population. D) government control.
1. Which of the following is NOT a reason why countries trade goods with one another? A) differences in technology used in different countries B) differences in countries' total amount of resources C)
More informationEconomics 1 Notes on Comparative Advantage Supply and Demand 2 A Linear Production Model The linear production model assumes that the possible outputs
Economics 1 Notes on Comparative Advantage Supply and Demand 1 Some Questions about Free Trade If two individuals or two nations with diering production skills trade, who gains and who loses? If one individual
More informationTRADING WITH THE WORLD*
Chapter 17 TRADING WITH THE WORLD* Key Concepts Patterns and Trends in International Trade The goods and services we buy from producers in other nations are our imports; the goods and services we sell
More informationTrade and Technology: The Ricardian Model
2 Trade and Technology: The Ricardian Model 1. At the beginning of the chapter there is a brief quotation from David Ricardo; here is a longer version of what Ricardo wrote: England may be so circumstanced,
More information5 International Trade
chapter: 5 International Trade 1. Assume Saudi Arabia and the United States face the production possibilities for oil and cars shown in the accompanying table. Saudi Arabia United States Quantity of oil
More informationINTERNATIONAL TRADE: THEORY AND POLICY
INTERNATIONAL ECONOMIC POLICY AND DEVELOPMENT AA 2017-2018 INTERNATIONAL TRADE: THEORY AND POLICY PROF. PIERLUIGI MONTALBANO pierluigi.montalbano@uniroma1.it Why do countries trade? U.S. Imports of Snowboards,
More informationInternational Trade: Economics and Policy. LECTURE 5: Absolute vs. Comparative Advantages
Department of Economics - University of Roma Tre Academic year: 2016-2017 International Trade: Economics and Policy LECTURE 5: Absolute vs. Comparative Advantages 1 Reasons for Trade Proximity The closer
More informationComparative Advantage. Or why trade is good
Comparative Advantage Or why trade is good Absolute vs. Comparative Advantage Absolute - better in every possible way being considered Comparative - better at a single task or is the least worst at a certain
More informationThe Ricardian Model. Rafael López-Monti Department of Economics George Washington University Summer 2015 (Econ 6280.
SURVEY OF INTERNATIONAL ECONOMICS The Ricardian Model Rafael López-Monti Department of Economics George Washington University rlopezmonti@gwu.edu Summer 2015 (Econ 6280.20) Required Reading: Feenstra,
More informationChapter 3 Why Everybody Trades: Comparative Advantage
International Economics Thomas Pugel 16th Edition Solutions Manual Completed download: https://testbankarea.com/download/international-economics-16th-editionsolutions-manual-thomas-pugel/ Test Bank for
More informationChapter. International Trade CHAPTER IN PERSPECTIVE
International Trade Chapter 34 CHAPTER IN PERSPECTIVE In Chapter 34 we see that all countries can benefit from free trade but, despite this fact, countries nevertheless restrict trade. Describe the patterns
More informationChapter 2 The Economic Problem
Chapter 2 The Economic Problem 2.1 Production Possibilities and Opportunity Cost 1) The production possibilities frontier A) refers to the technology used in such goods as computers and military aircraft.
More informationFRAMINGHAM STATE COLLEGE PRINCIPLES OF MICROECONOMICS PROBLEM SET NUMBER 2
FRAMINGHAM STATE COLLEGE PRINCIPLES OF MICROECONOMICS PROBLEM SET NUMBER 2 Text Chapter 2: Page 34 3. Draw a circular-flow diagram. Identify the parts of the model that Correspond to the flow of goods
More informationEconomics 101 Fall 2018 Answers to Homework #1 Due Thursday, September 27, Directions:
Economics 101 Fall 2018 Answers to Homework #1 Due Thursday, September 27, 2018 Directions: The homework will be collected in a box labeled with your TA s name before the lecture. Please place your name,
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The production possibilities frontier 1) A) once applied to U.S. technology but now refers to Japanese
More informationCHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE
CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE MULTIPLE CHOICE 1. The mercantilists would have objected to: a. Export promotion policies initiated by the government b. The use of tariffs
More informationAnswer multiple choice questions on the green answer sheet. The remaining questions can be answered in the space provided on this test sheet
Name Student Number Answer multiple choice questions on the green answer sheet. The remaining questions can be answered in the space provided on this test sheet Econ 321 Test 1 Fall 2005 Multiple Choice
More informationGeneral Equilibrium. Additional exercises
General Equilibrium Additional exercises Microeconomics 2 - Róbert Veszteg 1. (Varian: 29.2.) Consider a small exchange economy with two consumers, Astrid and Birger, and two commodities, herring and cheese.
More informationThe Power of Trade and Comparative Advantage
Chapter 2 MODERN PRINCIPLES OF ECONOMICS Third Edition The Power of Trade and Comparative Advantage Outline Trade and Preferences Specialization, Productivity, and the Division of Knowledge Comparative
More informationThese workouts are designed to build your skills in describing economic situations with graphs and algebra. Budget sets are a good place to start,
These workouts are designed to build your skills in describing economic situations with graphs and algebra. Budget sets are a good place to start, because both the algebra and the graphing are very easy.
More information~ In 20X7, a loaf of bread costs $1.50 and a flask of wine costs $6.00. A consumer with $120 buys 40 loaves of bread and 10 flasks of wine.
Microeconomics, budget line, final exam practice problems (The attached PDF file has better formatting.) *Question 1.1: Slope of Budget Line ~ In 20X7, a loaf of bread costs $1.50 and a flask of wine costs
More information8 POSSIBILITIES, PREFERENCES, AND CHOICES. Chapter. Key Concepts. The Budget Line
Chapter 8 POSSIBILITIES, PREFERENCES, AND CHOICES Key Concepts FIGURE 8. The Budget Line Consumption Possibilities The budget shows the limits to a household s consumption. Figure 8. graphs a budget ;
More informationUse the following to answer questions 18-20: Page 3
1. A simplified representation that is used to study a real situation is called a(n): A) model. B) production possibility frontier. C) assumption. D) trade-off. 2. The models that economists construct:
More informationCHAPTER 2 *(Core Chapter) THE LAW OF COMPARATIVE ADVANTAGE
International Economics 12 th Edition Instructor s Manual CHAPTER 2 *(Core Chapter) THE LAW OF COMPARATIVE ADVANTAGE OUTLINE 2.1 Introduction 2.2 The Mercantilists' Views on Trade Case Study 2-1: Munn's
More informationChapter 16 International Trade and Globalization
Chapter 16 International Trade and Globalization Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. David Ricardo demonstrated that (a) weak
More informationAnswers to Text Questions and Problems in Chapter 15
Answers to Text Questions and Problems in Chapter 15 Answers to Review Questions 1. Prior to and during World War Two, Canada s leading trade partners were the United Kingdom and the United States. Today,
More informationCh 2. National Income Accounting ECO 402
Ch 2. National Income Accounting ECO 402 Key Words The circular flow Three approaches to measuring national income Production Income Expenditure Value added Final goods and intermediate goods Gross domestic
More informationProblem Set Chapter 6
Name: Class: Date: Problem Set Chapter 6 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. When the consumer price index rises, the typical
More informationECON* International Trade Winter 2011 Instructor: Patrick Martin
Department of Economics College of Management and Economics University of Guelph ECON*3620 - International Trade Winter 2011 Instructor: Patrick Martin MIDTERM 1 ANSWER KEY 1 Part I. True/False statements
More informationCASE FAIR OSTER. International Trade, Comparative Advantage, and Protectionism. Trade Surpluses and Deficits
PEARSON PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER Prepared by: Fernando Quijano w/shelly Tefft 2of 49 PART IV THE WORLD ECONOMY International Trade, Comparative Advantage,
More informationEconomics 101 Fall 1998 Section 3 - Hallam Exam 2. Iowa Missouri 100 4
Economics 101 Fall 1998 Section 3 - Hallam Exam 2 Iowa and Missouri can both produce corn and hay. The following table represents yield per acre for the two states. Corn is measured in bushels while hay
More informationEconomics 201 Fall 2010 Introduction to Economic Analysis Problem Set #1 Due: Wednesday, September 8
Economics 201 Fall 2010 Introduction to Economic Analysis Jeffrey Parker Problem Set #1 Due: Wednesday, September 8 Instructions: This problem set is due in class on Wednesday, September 8. Each student
More informationMacro Chapter 18 study guide questions
Macro Chapter 18 study guide questions Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A tariff or quota that limits the entry of foreign goods to the
More informationUniversity of Ottawa ECO1102 B Midterm # 1 (October 21, 2011)
Instructions: Please fill in your name and student number on every page of the exam questionnaire and on the NCS sheet. Use the NCS sheet to answer the Multiple Choice questions. There are 43 questions
More informationBEFORE YOU BEGIN Looking at the Chapter
Name Date Period MEASURING ECONOMIC PERFORMANCE Chapter 12 BEFORE YOU BEGIN Looking at the Chapter Fill in the blank spaces with the missing words. GDP is the total value of all goods and services produced
More informationEcon 170: Contemporary Economics Spring 2008 Final Exam / Section F: Solutions 120 points total
Econ 170: Contemporary Economics Spring 2008 Final Exam / Section F: Solutions 120 points total 1. Markets (2 points each) S 0 S 0 PRICE PER UNIT S 1 D 1 PRICE PER UNIT S 1 D 0 D 0 Quantity (A) D 1 Quantity
More informationTaxation and Efficiency : (a) : The Expenditure Function
Taxation and Efficiency : (a) : The Expenditure Function The expenditure function is a mathematical tool used to analyze the cost of living of a consumer. This function indicates how much it costs in dollars
More informationAssignment 1. Multiple-Choice Questions. To answer each question correctly, you have to choose the best answer from the given four choices.
ECON 3473 Economics of Free Trade Areas Instructor: Sharif F. Khan Department of Economics Atkinson College York University Winter 2007 Assignment 1 Part A Multiple-Choice Questions To answer each question
More information3. Investment in human capital shifts the aggregate production function: A) leftward. B) upward. C) rightward. D) downward.
Econ 102 Exam 1 Name ID Section Number 1. Which of the following equations describes the calculation of the natural unemployment rate? A) Natural unemployment = frictional unemployment + cyclical unemployment.
More informationChapter 2. Measurement. Teaching Goals. Classroom Discussion Topics
Chapter 2 Measurement Teaching Goals Students must understand the importance of measuring aggregate economic activity. Macroeconomists produce theories that provide useful insights and policy conclusions.
More informationPrinciple of Macroeconomics, Summer B 2017 Exam one
Principle of Macroeconomics, Summer B 2017 Exam one Name: (Please write your answer in the last page) Pather ID: 1) When goods and services are produced at the lowest possible cost, occurs. A) allocative
More informationChapter 21: Theory of Consumer Choice
Chapter 21: Theory of Consumer Choice We will now try to "get behind the demand curve To get behind the D curve we must study individual behavior How do individuals make consumption decisions? We have
More informationEconomics. Interdependence and the Gains from Trade. Interdependence. In this chapter, look for the answers to these questions: N.
C H A P T E R 3 Interdependence and the Gains from Trade P R I N C I P L E S O F Economics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 29 South-Western, a part of Cengage Learning, all
More informationSam and Dave's PPFs. May 9, Final Exam
ECONOMICS 10-007 Dr. John Stewart May 9, 2000 Final Exam Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet. Please note that some questions have
More informationFinal Exam. Figure 1
ECONOMICS 10-008 Final Exam Dr. John Stewart December 11, 2001 Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet using a No.2 pencil. Note a)=1,
More informationInternational Economics
International Economics Unit 5 Pretest As we learn about International Economics, let s see what you already know. Remember do the best you can, but don t stress this assessment doesn t count toward your
More informationPubPol 201. Module 3: International Trade Policy. Class 2 The Gains and Losses from Trade
PubPol 201 Module 3: International Trade Policy Class 2 The Gains and Losses from Trade Class 2 Outline The Gains and Losses from Trade Comparative advantage Other sources of gain from trade Who gains
More informationMACROECONOMICS. The Data of Macroeconomics MANKIW. In this chapter, you will learn. Gross Domestic Product: Expenditure and Income.
C H A P T E R 2 The Data of Macroeconomics MACROECONOMICS N. GREGORY MANKIW 2008 Worth Publishers, all rights reserved SIXTH EDITION PowerPoint Slides by Ron Cronovich In this chapter, you will learn the
More informationGlobal Economic Analysis # 1
1 Module # 7 Component # 1 Global Economic Analysis # 1 This Component: focuses on the basics of Global Analysis. assumes a base level of financial theory, but attempts to add a level of practical application.
More information3. What proportion of international trade is based on absolute advantage?
File: Ch02; Chapter 2: The Law of Comparative Advantage Multiple Choice 1. The Mercantilists did not advocate: a. free trade b. stimulating the nation's exports c. restricting the nations' imports d. the
More informationECON 1002 B. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 1 hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question.
More informationKorea University Principles of Macroeconomics ECON203(04) Spring Mock Midterm Prof. Kuk Mo Jung
ECON203(04) Spring 2016 Mock Midterm Prof. Kuk Mo Jung PLEASE PUT YOUR NAME and ID# now There are 30 multiple-choice questions (Part I) worth 60 points and two multi-part written response problems worth
More informationLecture 6 Comparative Advantage. January 29, Lecture Outline
Econ 101 Section 5 Lecture 6 Comparative Advantage January 29, 2004 Lecture Outline Logic of trade Absolute and comparative advantage Theory of comparative advantage Gains from specialization Terms of
More informationGROSS DOMESTIC PRODUCT
GROSS DOMESTIC PRODUCT 1. The three types of unemployment are,, and. 2. If Frank just moved to town and is looking for a job, he would be considered part of unemployment. 3. If Lisa was laid off from her
More informationAppendix: Indifference Curves
Appendix: Indifference Curves Chapter APPENDIX CHECKLIST The appendix uses indifference curves and budget lines to derive a demand curve. Indifference curves An indifference curve is a line that shows
More informationEconomics. Interdependence. Interdependence. Production Possibilities in the U.S.
9/17/21 C H A P T E R 3 Interdependence and the Gains from Trade P R I N C I P L E S O F Economics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich Modified by Joseph Tao-yi Wang 21 South-Western,
More informationProblem Set 1: Ricardo s Principle of Comparative Advantage
ECO 6331: International Trade Fall 2018 Thomas Osang Due Thursday, September 13, 2018 Problem Set 1: Ricardo s Principle of Comparative Advantage Note: Always show your work, not just your final results.
More informationChapter 02 Economist's View of Behavior
Chapter 02 Economist's View of Behavior Essay Questions 1. It is commonly believed that the best ways to motivate an employee are (1) to improve the quality of the workplace and (2) to make the employee
More informationCHAPTER 16 INTERNATIONAL TRADE
CHAPTER 16 INTERNATIONAL TRADE Chapter in a Nutshell In the second chapter of the text, you were introduced to the concepts absolute advantage and comparative advantage that are the principles on which
More informationLecture 19: Effects of International Trade
Lecture 19: Effects of International Trade November 29, 2016 Prof. Wyatt Brooks Summary from Last Time Quick summary of last time: The U.S. has a large trade deficit About half of that is the deficit with
More informationUnit 5: International Trade
Unit 5: International Trade 1 International Trade 2 Where does your stuff come from? (Check the tags on your clothes, shoes, watch, calculator, etc.) Why have your clothes and personal items traveled all
More informationMacroeconomics Canadian 7th Edition Abel SOLUTIONS MANUAL
Macroeconomics Canadian 7th Edition Abel TEST BANK Full download at: Macroeconomics Canadian 7th Edition Abel SOLUTIONS MANUAL Full download at: https://testbankreal.com/download/macroeconomics-canadian-7th-editionabel-test-bank/
More informationMacroeconomics 6th Edition Williamson SOLUTIONS MANUAL Full download at:
Macroeconomics 6th Edition Williamson SOLUTIONS MANUAL Full download at: Macroeconomics 6th Edition Williamson TEST BANK Full download at: https://testbankreal.com/download/macroeconomics-6th-edition-williamsonsolutions-manual-2/
More information3. Other things being equal, a lump sum tax is at least as good for a consumer as a sales tax that collects the same revenue from him.
Section I: or This section is worth a total of 10 marks. There are 10 questions worth 1 mark each; answer all of them. Simply indicate if you think the statement is true or false. 1. A consumer with convex
More informationI did not use any unauthorized aid on this exam. Name: (PRINT) UM ID #: Signature:
Econ 102 Lecture 100 Exam I Form 1 ECON 102/100 February 10, 2005 Section Day Time Location GSI 101 F 2:30-4 205 DENN Jooyong 102 F 11:30-1 373 Lorch Sue 103 F 1-2:30 373 Lorch Jooyong 104 M 4-5:30 351
More informationChapter 2 Commodity Trade
Chapter 2 Commodity Trade This chapter presents two models which stress international trade as the interaction between consumers: the standard two-good model and the varieties model. We can think of these
More informationChapter Thirty. Production
Chapter Thirty Production Exchange Economies (revisited) No production, only endowments, so no description of how resources are converted to consumables. General equilibrium: all markets clear simultaneously.
More informationLecture 7 Part 3. Announcements. Minnesota Economics Association (MEA) Conference Friday, October 27 th, 2017 https://mea2017.eventbrite.
Lecture 7 Part 3 Announcements Minnesota Economics Association (MEA) Conference Friday, October 27 th, 2017 https://mea2017.eventbrite.com Lecture 7 Part 3 1. Review of Tariffs and Comparative Advantage
More informationREVIEW. Unit I: Basic Economic Concepts. International Trade Why do people trade? Magic of Markets Brown Bag Activity
17 August 11 1-. Trade and Comparative Advantage 1 Unit I: Basic Economic Concepts 1 REVIEW 1. Explain how you would use the concept of opportunity cost in everyday life. 2. Differentiate between increasing
More informationMultiple Choice Questions (3 points each) Please answer the questions on the green scantron.
ECON 203-200, Fall 2006 EXAM #1 Multiple Choice Questions (3 points each) Please answer the questions on the green scantron. 1) Which of the following would NOT lead to a shift in demand curve for spinach:
More informationFinal Exam. Coconuts. Figure 1. a) fish, coconuts. b) coconuts, fish. c) fish, fish. d) coconuts, coconuts. e) fish, neither good.
ECONOMICS 10-007 Dr. John Stewart May 9, 2000 Final Exam Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet. Please note that some questions have
More informationRemember the reasons for trade:
Ricardian model Remember the reasons for trade: Differences between countries (climate, technology, productivity, resources, etc.) Comparative advantage Increasing returns to scale Imperfect competition
More informationMEASURING A NATION S INCOME
23 MEASURING A NATION S INCOME WHAT S NEW IN THE FOURTH EDITION: There is a new In the News box on The Underground Economy. LEARNING OBJECTIVES: By the end of this chapter, students should understand:
More informationLearning objectives. Gross Domestic Product
Learning objectives In this chapter, you will learn about: Gross Domestic Product (GDP) the Consumer Price Index (CPI) the Unemployment Rate The Data of Macroeconomics slide 1 Gross Domestic Product Two
More informationMEASURING GDP AND ECONOMIC GROWTH. Objectives. Gross Domestic Product. An Economic Barometer. Gross Domestic Product. Gross Domestic Product CHAPTER
MEASURING GDP AND ECONOMIC CHAPTER GROWTH Objectives After studying this chapter, you will able to Define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate
More informationSimon Fraser University Department of Economics. Econ342: International Trade. Final Examination. Instructor: N. Schmitt
Simon Fraser University Department of Economics Econ342: International Trade Final Examination Fall 2009 Instructor: N. Schmitt Student Last Name: Student First Name: Student ID #: Tutorial #: Tutorial
More informationFull file at
MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1) Gross domestic product is defined as 1) A) the total market value of the final goods and services
More informationAGGREGATE DEMAND AGGREGATE SUPPLY
AGGREGATE DEMAND 8 AND CHAPTER AGGREGATE SUPPLY A Way to View the Economy We can think of an economy as consisting of two major activities: buying and producing. When economists speak about aggregate demand,
More informationRecitation #7 Week 03/01/2009 to 03/07/2009. Chapter 10 The Rational Consumer
Recitation #7 Week 03/01/2009 to 03/07/2009 Chapter 10 The Rational Consumer Exercise 1. The following table provides information about Carolyn s total utility from reading articles about current events.
More informationNAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Midterm I March 14, 2008
NAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Section I: Multiple Choice (4 points each) Identify the choice that best completes the statement or answers the question. 1.
More informationECON Drexel University Summer 2008 Assignment 2. Due date: July 29, 2008
ECON 202-001 Drexel University Summer 2008 Assignment 2 Due date: July 29, 2008 Instructor: Yuan Yuan Name This homework has up to 10 points bonus. Question 1 (40 points, 2 points each): MULTIPLE CHOICE.
More informationCASE FAIR OSTER PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N. PEARSON 2014 Pearson Education, Inc.
PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER PEARSON Prepared by: Fernando Quijano w/shelly 1 of Tefft 31 2 of 31 PART IV THE WORLD ECONOMY International Trade, Comparative
More informationECO 2023: Principle of Microeconomics, Exam one
Name: Panther ID: ECO 2023: Principle of Microeconomics, Exam one Multiple Choice: Choose the one alternative that best completes the statement or answers the question. (Points: 25*4=100) 1. In economics,
More informationECON 1002 E. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 2.5 hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question.
More informationCome and join us at WebLyceum
Come and join us at WebLyceum For Past Papers, Quiz, Assignments, GDBs, Video Lectures etc Go to http://www.weblyceum.com and click Register In Case of any Problem Contact Administrators Rana Muhammad
More informationEconomic Performance. Sherif Khalifa. Sherif Khalifa () Economic Performance 1 / 55
Sherif Khalifa Sherif Khalifa () Economic Performance 1 / 55 People earning higher income levels also enjoy higher living standards. To judge economic well being, we consider the total income of an economy.
More informationChapter 2: The Data of Macroeconomics
Chapter 2: The Data of Macroeconomics 0 IN THIS CHAPTER, YOU WILL LEARN: the meaning and measurement of the most important macroeconomic statistics:! gross domestic product (GDP)! the consumer price index
More informationIntroduction. Countries engage in international trade for two basic reasons:
Introduction Countries engage in international trade for two basic reasons: They are different from each other in terms of climate, land, capital, labor, and technology. They try to achieve scale economies
More informationText transcription of Chapter 5 Measuring a Nation s Income
Text transcription of Chapter 5 Measuring a Nation s Income Welcome to the Chapter 5 Lecture on the Measuring a Nation s Income. We are going to start working with statistics to measure the size of economies
More informationDEPARTMENT OF ECONOMICS, UNIVERSITY OF VICTORIA
DEPARTMENT OF ECONOMICS, UNIVERSITY OF VICTORIA Midterm Exam I (October 09, 2012) ECON204 (A01), Fall 2012 Name (Last, First): UVIC ID#: Signature: THIS EXAM HAS TOTAL 7 PAGES INCLUDING THE COVER PAGE
More informationInterdependence. Interdependence and the Gains from Trade. In this chapter, look for the answers to these questions:
3 Interdependence and the Gains from Trade P R I N C I P L E S O F ECONOMICS FOURTH EDITION N. GREGORY MANKIW Premium PowerPoint Slides by Ron Cronovich 28 update 28 South-Western, a part of Cengage Learning,
More information2c Tax Incidence : General Equilibrium
2c Tax Incidence : General Equilibrium Partial equilibrium tax incidence misses out on a lot of important aspects of economic activity. Among those aspects : markets are interrelated, so that prices of
More informationInequality and Redistribution
Inequality and Redistribution Chapter 19 CHAPTER IN PERSPECTIVE In chapter 19 we conclude our study of income determination by looking at the extent and sources of economic inequality and examining how
More informationy > 2x! 4 0 > 2(0)! 4
y > 2x! 4 0 > 2(0)! 4? 0 >!4 y 6 4 2-10 -5 5 10 x -2-4 -6 y! " 1 3 x + 3 y 6 0! 3 4 2-10 -5 5 10 x -2-4 -6 y > 2x! 4 0 >? 2(0)! 4 0 >!4 y 6 y! " 1 3 x + 3 0! 3 4 2-10 -5 5 10 x -2-4 -6 Linear Programming
More informationCHAPTER 16 International Trade
PART 6: INTERNATIONAL ECONOMICS CHAPTER 16 International Trade Slides prepared by Bruno Fullone, George Brown College Copyright 2010 McGraw-Hill Ryerson Limited. 1 In This Chapter You Will Learn Learning
More information2010 New Zealand Economics Competition
2010 New Zealand Economics Competition Tuesday 3 August 2010 Question booklet Instructions: 1. Do not open this question booklet until instructed to do so. 2. You have fifty (50) minutes to answer all
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester. ECON 101 Mid term Exam
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2014 15 Fall Semester ECON 101 Mid term Exam Suggested Solutions 28 November 2014 Duration: 90 minutes Name Surname:
More informationECON 1000 B. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question.
More informationInterdependence and Trade. Interdependence and the Gains from Trade Comparative Advantage. Interdependence and Trade
Interdependence and Trade Interdependence and the Gains from Trade Herbert Stocker Institute of International Studies University of Ramkhamhaeng You wake up to an alarm clock made in Korea. You pour yourself
More informationLesson 12 - The Global Economy
Lesson 12 - The Global Economy Acknowledgement: Ed Sexton, Kerry Webb, and Rick Hirschi were the primary authors of the material contained in this lesson. Section 1: Specialization and Trade Adam Smith
More information