International Economics - Econ 323 Mart´ın Alfaro
Mock Questions
The following are typical questions that could appear in the final.
There’ll be two type of questions in the final. First, questions where you’ll have to simply
define and explain material we saw in class. Second, some questions which are harder since
they imply thinking how to apply the concepts we saw in class.
In addition to the questions I incorporated here, you could practice with the questions
from the assignments. Those would be part of the second type of questions.
I included way more questions than the ones that’d appear in the real final.
The idea is that you can practice more.
1
International Economics - Econ 323 Mart´ın Alfaro
FIRST PART OF THE COURSE
[1] About Ricardo Model: for the following subquestions refer to an example with
(USA) and (MEX), two goods (manuf. and agric.) and where (USA) has comparative
advantages in manuf. (if you want to put some numbers to unit labor requirements to
answer the questions more easily, that’s fine with me)
(a) Define the concept of comparative advantages
(b) from the information provided, can we infer if (MEX) has comparative advantages
in some good?
(c) What happens in each country under trade relative to autarky regarding produc-
tion, imports and exports. Explain the mechanism behind.
(d) What happens under trade relative to autarky regarding the exported and im-
ported goods’ prices?
(e) Why in this model there are gains of trade?
(f) Suppose that (USA) has absolute advantages in both manuf. and agric. Does this
affect the model?
(g) Is Ricardo’s a model we could be use to analyze income distribution? Justify why
yes or no.
[2] About HO: for the following subquestions refer to an example with (USA) and
(MEX), two goods (iPads and shirts) and two factors: low-skilled (LS) and high-
skilled (HS) workers. Assume that iPads are relatively intensive in the use of HS and
that (MEX) is relatively abundant in LS workers
(a) Define the concepts of countries’ relative abundancy of a factor and good’s relative
intensity of a factor.
(b) Can we infer from the information provided in the question if shirts are intensive
in the use of some factor and if (USA) is relatively abundant in some factor?
(c) What happens in each country under trade relative to autarky? Specifically, what
will each country produce, export and import? Explain your answer.
(d) What happens under trade relative to autarky regarding the exported and im-
ported goods’ prices?
(e) Why in this model there are gains of trade?
(f) Can we say something about income distribution? If yes, explain what happens,
if no say why.
[3] About Specific Factors: for the following subquestions refer to an example with three
factors (low-skilled (LS) and high-skilled (HS) workers, and capital), two industries
(tech and clothes). The country under consideration has comparative advantages in
tech relative to the rest of the world. Capital is mobile between industries while LS is
specific...
