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Timed Assessment

Supplementary Period 2022-2023

International Trade Theory and Policy

The assessment has five questions in total.

First four questions are true, false or uncertain statements; where you need to provide an answer and justify this answer. You need to answer all these questions. The maximum word limit for these four questions is strictly 250 words each. These questions are worth 15 marks each.

The remaining question is an essay question. The maximum word limit for this question is strictly 1000 words. This question is worth 40 marks.

You are allowed to handwrite mathematical solutions and draw diagrams where relevant, and insert these as scanned pictures in your answers. Everything else should be typed. Word documents and PDFs are both acceptable.

Question 1:

Statement refers to the Heckscher Ohlin model of trade. Production possibilities frontier will be concave to the origin, given the model’s assumptions about returns to scale.

Question 2:

Statement refers to the Neoclassical model of trade. A county must produce where MRT is equal to the MRTS, in order to gain from trade.

Question 3:

Statement refers to the specific factors model of trade. Opening to trade will result in de-terminate changes in real returns but indeterminate changes in nominal returns to factors of production.

Question 4:

Statement refers to partial equilibrium model of monopoly and oligopoly In an industry with a single producer of a good, an increase in the number of firms operating in the market (due to trade), must benefit the consumers.

Question 5:

“Free trade cannot be said to be beneficial to all sections of a trading nation. As such, it is necessary for it to be accompanied by an income redistribution policy.” Discuss.