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ECO 312 Tutorial Chapter 6 (2024 Tutorial Questions)

This document is a tutorial exercise for the ECO 312 course at Rhodes University, focusing on International Trade Theory and Policy. It includes a series of questions related to producer and consumer equilibrium in autarky, comparative advantages, trade patterns, and the gains from trade. The exercise is designed to assess students' understanding of key concepts in international trade theory.

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5 views

ECO 312 Tutorial Chapter 6 (2024 Tutorial Questions)

This document is a tutorial exercise for the ECO 312 course at Rhodes University, focusing on International Trade Theory and Policy. It includes a series of questions related to producer and consumer equilibrium in autarky, comparative advantages, trade patterns, and the gains from trade. The exercise is designed to assess students' understanding of key concepts in international trade theory.

Uploaded by

elihlefass0
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 7

RHODES UNIVERSITY

DEPARTMENT OF ECONOMICS AND ECONOMIC HISTORY


ECO 312 [INTERNATIONAL TRADE THEORY AND POLICY]

TUTORIAL EXERCISE [ONLINE]


TERM 2 (SEMESTER 1)

CHAPTER 6

Tutorial Date: 11th April 2024


_____________________________________________________________________
SECTION A (Answer all questions)
_____________________________________________________________________

1. Which of the following is correct at producer equilibrium in autarky


a. (PX/PY) > (MCX/MCY).
b. (PX/PY) < (MCX/MCY)
c. (PX/PY) = MRT = (MCX/MCY)
d. (PX/PY) > MRT = (MCX/MCY)
e. (PX/PY) = MRT < (MCX/MCY)

2. Which of the following is correct at consumer equilibrium in autarky


a. MRT = (MCX/MCY) = (PX/PY) = MRS
b. MRT > (MCX/MCY) = (PX/PY) = MRS
c. (PX/PY) = MRT = (MCX/MCY)
d. (PX/PY) > MRT = (MCX/MCY)
e. (PX/PY) = MRT < (MCX/MCY)

Use this information to answer questions 3 - 7


Suppose a country produces both goods X and Y. If the country now faces international
prices of (PX/PY)2, and that the relative prices in the domestic market are lower for good X and
higher for good Y than in the international market.

3. The country has a comparative ______________.


a. advantage in good Y
b. disadvantage in good X
c. advantage in both goods
d. advantage in good X
e. disadvantage in both goods

4. The country has a comparative ______________.


a. advantage in good Y
b. disadvantage in good Y
c. advantage in both goods
d. disadvantage in good X
e. disadvantage in both goods

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5. The country will produce ___________ good X and ___________.
a. more; import
b. less; import
c. more; export
d. less; export
e. no; import

6. The country will produce ___________ good Y and ___________.


a. more; import
b. less; import
c. more; export
d. less; export
e. no; import

7. The country’s consumers is maximised where _________.


a. MRT = (MCX/MCY) = (PX/PY)1 = (MUX/MUY) = MRS
b. MRT = (MCX/MCY) > (PX/PY)1 = (MUX/MUY) = MRS
c. MRT = (MCX/MCY) < (PX/PY)2 = (MUX/MUY) = MRS
d. MRT = (MCX/MCY) = (PX/PY)2 = (MUX/MUY) = MRS
e. MRT = (MCX/MCY) < (PX/PY)1 = (MUX/MUY) = MRS

8. The total gains from trade are often divided into two distinct parts, namely______.
a. consumption gain and gains from exchange
b. production gain and gains from specialisation
c. consumption gain and production gain
d. total gains and gains from exchange
e. total gains and gains from specialisation

Use the diagram below to answer questions 9 to 19

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9. Which of the following is correct?
a. (Px/Py)1 < (Px/Py)3 < (Px/Py)2
b. (Px/Py)1 > (Px/Py)3 < (Px/Py)2
c. (Px/Py)1 < (Px/Py)3 > (Px/Py)2
d. (Px/Py)1 > (Px/Py)3 > (Px/Py)2
e. (Px/Py)1 < (Px/Py)2 < (Px/Py)2

10. Which of the following is correct?


a. Country 1 has a relatively strong preference for good X
b. Country 2 has a relatively strong preference for good Y
c. Country 1 has a relatively strong preference for both goods
d. Country 2 has a relatively strong preference for both goods
e. Country 1 has a relatively strong preference for good Y

11. Which of the following is correct?


a. Country 1 has a relatively strong preference for good X
b. Country 2 has a relatively strong preference for good X
c. Country 1 has a relatively strong preference for both goods
d. Country 2 has a relatively strong preference for both goods
e. Country 1 has a relatively strong preference for good Y

12. Which of the following is correct about Country 1?


a. It has a comparative advantage in good X
b. It has a comparative advantage in good Y
c. It has a comparative disadvantage in good X
d. It has a comparative advantage in both goods
e. It has a comparative advantage in both goods

13. Which of the following is correct about Country 2?


a. It has a comparative advantage in good X
b. It has a comparative advantage in good Y
c. It has a comparative disadvantage in good Y
d. It has a comparative advantage in both goods
e. It has a comparative advantage in both goods

14. With trade, Country 1 will __________________.


a. export (x2x3) and import (y3y4)
b. export (y1y3) and import (x3x5)
c. export (x1x2) and import (y4y5)
d. export (y2y3) and import (x3x4)
e. export (x1x3) and import (y3y5)

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15. With trade, Country 2 will ___________________.
a. export (x2x3) and import (y3y4)
b. export (y1y3) and import (x3x5)
c. export (x1x2) and import (y4y5)
d. export (y2y3) and import (x3x4)
e. export (x1x3) and import (y3y5)

16. With trade, Country 1’s consumption will move from _____________.
a. point A to point D
b. point A to point A’
c. point B to point D
d. point B to point B’
e. point A to point B

17. With trade, Country 2’s consumption will move from _____________.
a. point A to point D
b. point A to point A’
c. point B to point D
d. point B to point B’
e. point A to point B

18. The trade triangle for Country 1 is __________________


a. AED
b. DHB
c. A’FD
d. DGB’
e. A’JB’

19. The trade triangle for Country 2 is __________________


a. AED
b. DHB
c. A’FD
d. DGB’
e. A’JB’

Use the diagram below to answer questions 20 to 30

20. Which of the following is correct about Country 1?


a. It has a comparative advantage in good X
b. It has a comparative advantage in good Y
c. It has a comparative disadvantage in good X
d. It has a comparative advantage in both goods
e. It has a comparative advantage in both goods

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21. Which of the following is correct about Country 2?
a. It has a comparative advantage in good X
b. It has a comparative advantage in good Y
c. It has a comparative disadvantage in good Y
d. It has a comparative advantage in both goods
e. It has a comparative advantage in both goods

22. Which of the following is correct?


a. PPF1 shows technology which is relatively more efficient in producing good Y
b. PPF2 shows technology which is relatively more efficient in producing good X
c. PPF1 shows technology which is relatively more efficient in producing both
goods
c. PPF2 shows technology which is relatively more efficient in producing both
goods
e. PPF1 shows technology which is relatively more efficient in producing good X

23. Which of the following is correct?


a. PPF1 shows technology which is relatively more efficient in producing good Y
b. PPF2 shows technology which is relatively more efficient in producing good Y
c. PPF1 shows technology which is relatively more efficient in producing both
goods
c. PPF2 shows technology which is relatively more efficient in producing both
goods
e. PPF2 shows technology which is relatively more efficient in producing good X

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24. Which of the following is correct?
a. (Px/Py)1 < (Px/Py)3 < (Px/Py)2
b. (Px/Py)1 > (Px/Py)3 < (Px/Py)2
c. (Px/Py)1 < (Px/Py)3 > (Px/Py)2
d. (Px/Py)1 > (Px/Py)3 > (Px/Py)2
e. (Px/Py)1 < (Px/Py)2 < (Px/Py)2

25. With trade, Country 1 will __________________.


a. export (x4x5) and import (y1y3)
b. export (y2y3) and import (x3x4)
c. export (x4x5) and import (y2y3)
d. export (y1y3) and import (x3x5)
e. export (x3x5) and import (y1y3)

26. With trade, Country 2 will ___________________.


a. export (x1x3) and import (y3y5)
b. export (y5y3) and import (x1x3)
c. export (x1x2) and import (y4y5)
d. export (y4y3) and import (x2x3)
e. export (y4y5) and import (x1x3)

27. With trade, Country 1’s consumption will move from _____________.
a. point A to point D
b. point A to point E
c. point D to point E
d. point B to point C
e. point B to point E

28. With trade, Country 2’s consumption will move from _____________.
a. point A to point D
b. point A to point E
c. point C to point E
d. point B to point C
e. point B to point E

29. The trade triangle for Country 1 is __________________


a. CFE
b. BHE
c. EJD
d. CKD
e. EGA

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30. The trade triangle for Country 2 is __________________
a. BHE
b. EJD
c. CKD
d. CFE
e. EGA

END OF QUESTION PAPER

Page 7 of 7

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