ECO3610 Final Exam Sample
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ECO3610 Final Exam Sample
Q1: Consider a two goods (FB and SB) Ricardian model, labor is the only factor of production. L ; FB; SB denote the number of labor, technology to produce FB and technology to produce SB
a) Derive the production possibility frontier (PPF) curve
b) Consider Autarky, solve the relative price
Q2: There are two sectors (FB and SB) in the US, let L, F and S denote the endowments of labor, FB specific factors and SB specific factors. Let the production function be
QFB = (LFB) F1 ¡
QSB = (LSB) S1 ¡
and the utility function be
U = (CFB) (CSB)1 ¡
let pFB; pSB ; w ; pF ; pS denote the price of FB, price of SB, wage, price of FB specific factor, and price of SB specific factor
a) Solve for fQFB; QSBg
b) Solve for fCFB ; CSBg
c) Consider Autarky, solve the relative price as a function of exogenous parameters
Q3: Suppose you have 10 dollars to consume. You can use up the dollars to buy coffee, tea or both. The price of a cup of coffee is 5 dollars and the price of a cup of tea is 5 dollars as well. Show that consumer gains from the increase of varieties in the demand system of the Armington model. The utility function is given below and > 1
U = c + c
Q4: Suppose the total global profit of country i is given by
J
i (!) =qij(m) X [pij(!)qij(!) ¡ iqij(!)Wi] ¡iWi
if the number of firms (N) increases exogenously, how will the average cost of firms change?
2022-05-16