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 externalitie