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Bonus Quiz #1 (2D03)

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McMaster University
Rashid Khan

Bonus Quiz #1 Economic Issues 2D03 Thursday September 12, 2013 Solution 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
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