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Final

Last Year Final Exam_solution.doc

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Department
Administration
Course
ADM4354
Professor
All Professors
Semester
Winter

Description
ADM 4354 Winter 2010 Final Exam3 parts 52 points totalPart 1 multiplechoice questions 25 questions 1 point each 25 points total1 According to the comparative advantage international trade model with two countries C1 and C2 and two products X1 and X2 if country C1 has comparative advantage in X1 it also must have a Absolute advantage in X1b Absolute disadvantage in X1c Comparative advantage in X2d Comparative disadvantage in X2e both a and cf both a and dg both b and ch both b and di None of the aboveAns D2 According to the comparative advantage international trade model with two countries C1 and C2 and two products X1 and X2 if in equilibrium country C1 produces both products then a C1 has comparative advantage in both X1 and X2b C1 has comparative disadvantage in both X1 and X2c C1 has absolute advantage in both X1 and X2d C1 has absolute disadvantage in both X1 and X2e both a and cf both a and dg both b and ch both b and di None of the aboveAns i3 For which of the following parts of the transaction exposure option hedge provides better risk reduction relative to the forward hedge a Quotationb Backlogc Billingd Both a and be Both a and cf both b and c1g All of the aboveh None of the aboveAns A4 Consider comparative advantage international trade model with two countries C1 and C2 and two products X1 and X2 where country C1 has comparative and absolute advantage in producing X1 while country C2 has comparative and absolute advantage in producing X2 Assume that without trade product X1 costs 1 in both courtiers while product X2 costs 2 in country C1 and 3 in country C2 Assume also that in the equilibrium with free trade product X1 still costs 1 Which of the following statements must be true about the equilibrium price of X2a X22b X22c X22d 2X23e 2X23f 2X23g 2X23h X23i X23j X23k none of the aboveAns gQuestions 5 and 6 are based on the following informationConsider comparative advantage international trade model with two countries C1 and C2 and two products X1 and X2 where country C1 has comparative and absolute advantage in producing X1 while country C2 has comparative and absolute advantage in producing X2 The peoples consumption preferences in both countries are identical and for each unit of consumption of X1 they must consumeunits of X2 Assume that initially the economy is in freetrade equilibrium in which both countries benefit from trade At some future day the price of product X2 will increase and the economy will move to a new equilibrium in which both countries still benefit from trade5 What will happen the production of X1 and X2 in C1a production of both X1 and X2 will increaseb production of X1 will increase while production of X2 will not changec production of X1 will increase while production of X2 will decreased production of X1 will not change while production of X2 will increasee production of X1 and X2 will not changef production of X1 will not change while production of X2 will decrease2
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