ECON 441 Midterm: Exam1 Spring 2002
Document Summary
The questions are worth a total of 80 points, as indicated, and you will have 80 minutes to complete the exam: [32 points] the graph below shows production possibility frontiers for two countries, Home and foreign, producing two goods, food and cloth. 120 units of labor, while foreign has 160 units of labor. Which has comparative advantage in food: (16 points) copy the diagram to your blue book, making sure to keep approximately the proportions shown above, although you may omit the numbers. Then use the diagram as you"ve drawn it to illustrate, for plausible preferences, both autarky and free-trade equilibria for a world consisting only of these two countries. If there are quantities, distances, or slopes that should be equal in order for your diagram to represent equilibrium, be sure either that they look equal or that you say that they are.
