Econ

754 Words Sep 25th, 2012 4 Pages
Assume that a cargo ship carrying the merchandise of a cloth merchant has been wrecked. Such a setback will be accounted as the merchant’s:
Part I: Choose the one alternative that best completes the statement or answers the question. (1 Point each)

1. Which of the following is a positive statement?
a. Heavy snowfall drives up the demand for heaters.
b. Fiscal expenditures should be increased to combat recession.
c. Government should encourage foreign direct investments to generate employment.
d. Organs trade should be banned across nations.

ANS: A PTS: 1 DIF: Medium NAT: Reflective Thinking

2. Assume that a cargo ship carrying the merchandise of a cloth merchant has been wrecked. Such a setback will be accounted
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d. Jacob’s opportunity cost is equal to Harold’s.

ANS: B PTS: 1 DIF: Medium NAT: Reflective Thinking

7. Jake can wash 6 cars or mow 3 lawns during the same time. His marginal cost of washing a car is:
a. mowing one-third lawn.
b. mowing half a lawn.
c. mowing one lawn.
d. mowing 2 lawns.

ANS: B PTS: 1 DIF: Medium NAT: Analytic

8. Which of the following is true about the U.S. trade with Ireland post-1990?
a. The U.S. became a net exporter of software to Ireland.
b. Output of potato per acre doubled with the introduction of new techniques, making the U.S. a net exporter of potatoes to Ireland.
c. The U.S. production set shifted inward and Ireland gained advantage in the production of both software and potatoes.
d. Productivity growth in the U.S. software industry was higher despite the cost-shifting innovations witnessed Ireland.

ANS: B PTS: 1 DIF: Easy NAT: Analytic

Part II: Please answer the following question on the space provided below and show all your work. (2 Points)

1. Explain the significance of economic institutions in international trade. Please give and explain three forms of institutions.

1. Explain the significance of economic institutions in international trade.

ANS:
Economic institutions define the environment in which people can trade. As an example, criminal law is one of many conditions that affects trade between people. The law limits peoples' opportunities, it threatens a person with

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