ECON 441 Midterm: Exam 2 Summer 2002
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The questions are worth a total of 60 points, as indicated. To assist you, i have drawn two straight lines tangent to pairs of the isoquants, showing the points of tangency as open dots, and also drawing the rays from the origin through these points of tangency. Factor endowments are shown for seven countries, represented by the solid dots labeled. Then determine the effect, at constant prices, of a developing country in the stated situation increasing its capital stock while holding its labor force constant. Summer term 2002: [12 points] use the reciprocal dumping model to determine the effect of a fall in the. Page 3 of 4 cost of transportation on the foreign market, as follows. Find the changes in total sales in the foreign market: sales there by the home-country firm, sales there by the foreign-country firm, the well-being of foreign consumers,
