ECON 2D03 Study Guide - Quiz Guide: Competitive Equilibrium, Social Capital, Economic Surplus
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Bonus Quiz #1 Economic Issues 2D03 Thursday September 12, 2013
Circle A if the statement is true (T) and circle B if the statement is false (F).
1. Globalization has led to diminished authority of the nation-state.
2. According to Chan, “Although globalization may eliminate some dated social
values and may transmit some foreign values to a country, its total impact on
community trust can be positive”.
3. Globalization encompasses international trade, commerce, finance, businesses,
outsourcing and technology-transfers.
Answer Questions #4-7 on the basis of the following demand-supply equations of
good X in Canada, where P stands as the price in dollar and Q stands for
quantities of good X.
Q = 200 – P [Demand equation in Canada]
Q = - 20 + P [Supply equation in Canada]
4. Assume that Canada does not participate in international trade of good X. In this
case, the competitive equilibrium P is $100 and the equilibrium Q is 100.
5. Assume that Canada is involved in free international trade with world price of
good X at $60. In this case, the total import of good X will be 120.
6. Given the world-price at $60, the net gain from free trade as opposed to no-trade
will be $2500
7. The net gain from trade will be less than $2500, if we take into account
transportation costs and costs from less production and less employment.
8. If network externalities are more in the nature of public good, then it can be
perceived as a component of total factor productivity.
9. Uses of social capital always lead to positive externalities.
10. The formal and informal networks provide a platform for interaction, cooperation
and reciprocity. By bring people together in informal and formal networks, social
capital brings confidence, awareness and trust.
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