2010 Final Exam Short Answer
2010 Final Exam Short Answer

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School
University of Toronto Scarborough
Department
Economics for Management Studies
Course
MGEA02H3
Professor
all
Semester
Summer

Description
SHORT ANSWER BOOKLET FOR ECMA04 FINAL EXAM DECEMBER 2010 YOU MUST HAND IN THIS ANSWER BOOKLET AT THE END OF THE EXAM. DO NOT REMOVE THE STAPLE WHEN COMPLETING YOUR ANSWERS. WRITE YOUR NAME AND STUDENT NUMBER IN THE SPACE BELOW. NAME____________________________________________________________________ last name (underline your last name) first name STUDENT NUMBER _________________________________________ There are two short answer questions. Complete the answers in the appropriate place in this booklet and hand in the booklet at the end of the exam. You are required to draw graphs/diagrams in this booklet. Make sure you label all diagrams/graphs as fully as possible. Answer this question on the next page: (10 marks) 42. In Canada, the production of 1 unit of food (F) requires 1/6 of a unit of labour and the production of 1 unit of shelter (S) requires 1/8 of a unit of labour. In Morocco, the production of 1 unit of food (F) requires 1/4 of a unit of labour and the production of 1 unit of shelter (S) requires 1/2 of a unit of labour. Canada has 60 units of labour and Morocco has 60 units of labour. In the absence of trade, Canada produces and consumes 135 units of food and 300 units of shelter, and Morocco produces and consumes 80 units of food and 80 units of shelter. These two products and these two countries are the only ones in the world. When trade is opened up, the two countries trade food for shelter at a 1-to-1 ratio, and 160 units of food and 160 units of shelter are exchanged. On the diagrams provided, draw and clearly label the production possibilities curve for each country. Indicate where each country starts out before trade occurs (w0th a C for Canada 0nd a M for Morocco). Indicate the point at which each country produces (usinP a C for Canada andPa M for Morocco) and the point at which each country consumes (using a C* for Canada and a M* for Morocco), and show the trading line (the consumption possibilities curve or consumption possibilities function) for each country. Label your diagram as completely as possible. Below the diagram, explain in a small number of words what is meant by “the terms of trade”. How can we tell the terms of trade by looking at the graph? (10 marks) 1 FOOD 600 480 360 240 120 0 120 240 360 480 SHELTER What is meant by th
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