8/11/2019 Posthw2 Ecn 306 Fall2014

1/8

1. Which below is true regarding the data used by GDA MacDougall?

a. For each of the industries listed, U.S. absolute laborroducti!ity was twice the U.". absolute labor roducti!ity.b. For each of the industries listed, U.". absolute laborroducti!ity was twice the U.S. absolute labor roducti!ity.c. Wages for U.". wor#ers were $ore than twice those for U.S.wor#ers.d. Wages for U.S. wor#ers were twice those for U.". wor#ers.e. Wages for both nations were e%ual.

Answer& '''''

(. GDA MacDougall)s results can be interreted as

a. Strong e!idence against the *icardo +rade Model.b. Strong e!idence for the *icardo +rade Model.c. Strong e!idence against the ec#scher-hlin or Factor/ndow$ents trade $odel.d. Strong e!idence for the ec#scher-hlin or Factor /ndow$entstrade $odel.e. Strong e!idence that absolute roducti!ity is a $a0ordeter$inant of trade atterns.

Answer& '''''

. Use the graph below to answer questions 3-5.Suppose the nation depicted in

the graph is initially in autarky at point X. What is the autarky relative price of shoes(Ps/Pc)?

HW2uestions!graph.pdf

a. Ps/Pc " #/! $/S

b. Ps/Pc " # $/S

c. Ps/Pc " ! $/S

d. Ps/Pc " %& $/S

e. Ps/Pc " #/%& $/S

Answer& '''''

2. Suose that 3 $onths ago the nation deicted in the grah hadoened u to free trade. Where is the new roduction oint li#ely to beafter three wee#s of ha!ing a free trade olicy?

a. 4oint A

8/11/2019 Posthw2 Ecn 306 Fall2014

2/8

b. 4oint 5c. 4oint 6d. 4oint 7e. 4oint D

Answer& '''''

8. 'fter si onths of ipleenting a free trade policy* +hat is the ,arginal $ost

(,$s/,$c) of producing an etra unit of shoes (in ters of foregone clothproduction)?

a. ,$s/,$c " # $/S

b. ,$s/,$c " ! $/S

c. ,$s/,$c " #/! $/S

d. ,$s/,$c " ! S/$

e. ,$s/,$c " 2/! S/$

Answer& '''''

3. ' nation +ith a -icardotype econoy has arrived at its free trade euiliriu.

Which of the graphs dra+n elo+ illustrates the ne+ consuption possiilities as a

result of oving to free trade? 0n each graph* the line laeled Ppc is the productionpossiility curve and the one laeled $pcW is the consuption possiility curve +ithtrade or ore accurately* the outer oundary of the $onsuption possility set +ithtrade.

HW2prole1graph.png

a. raph '

b. raph 3

c. raph $

d. raph 4

e. 'll are possiilities.

Answer& '''''

9. 5ecause they ay high wages, industries in rich nations are unableto co$ete with roducts $anufactured in low-wage nations.

8/11/2019 Posthw2 Ecn 306 Fall2014

3/8

a. +rueb. False

Answer& '''''

:. 5ecause they ha!e outdated and oor technology, industries in oornations are unable to co$ete with roducts $anufactured by industriesin rich nations.

a. +rueb. False

Answer& '''''

;. Which of the follo+ing are consistent +ith the past or conteporary doctrine ofercantilis?

i. overnents should susidi5e eports. ii. 6ational +elleing is directly related tothe accuulation of precious etals. iii. $onteporary ercantilis focuses on 7ogains and losses due to international trade. iv. 8rade deficits are good since theyring gold into the nation running the trade deficit. v. 8rade deficits are ad sincethey lead to a loss of gold for the nation running the trade deficit.

a. i* ii

b. i* iii* iv

c. ii* iii* iv

d. i* iii* v

e. i* ii* iii* v

Answer& '''''

1

8/11/2019 Posthw2 Ecn 306 Fall2014

4/8

a. %&

b. 2&

c. #2

d. 2%

e. #&&

Answer& '''''

11. -ecall that initially all 9.S. laor is eployed in +heat production. 't thisproduction coination* the arginal cost (,$c/,$+) of a unit of cloth (in ters offoregone +heat production) is

8/11/2019 Posthw2 Ecn 306 Fall2014

5/8

calculate ,$c/,$+* the arginal cost of producing a unit of $ (in ters of theforgone W production)* at t+o points along the -oW PP$. 8he ,$c/,$+ is

8/11/2019 Posthw2 Ecn 306 Fall2014

6/8

a. 8he 9.S. +ill eport H* and the -EW +ill eport $.

b. 8he 9.S. +ill eport S* and the -EW +ill eport 3.

c. 8he 9.S. +ill eport 3* and the -EW +ill eport H.

d. 8he 9.S. +ill eport $* and the -EW +ill eport H.

e. 8he 9.S. +ill eport $* and the -EW +ill eport 3.

Answer& '''''

18. =ou are now gi!en the following additional data& >@> ( B. Whatroducts will the U.S. eCort?

a. 7

b. S, 5c. 5, S, 7d. 7, , Se. 5,

Answer& '''''

13. 9se the graphs (Figure !.#) in the P4F elo+ to ans+er uestions #12&. 0f

oth nations have the sae aount of laor*

8/11/2019 Posthw2 Ecn 306 Fall2014

7/8

d. /G> #/2

Answer& '''''

1:. 8he opportunity cost of one liter of aple syrup production in $anada is

8/11/2019 Posthw2 Ecn 306 Fall2014

8/8

Answer& '''''