National Economics University

School of Trade and International Economics

-oOo-
International Economics
Exam date: 11 October 2021
Examination Paper No.1
(Exam time: 45 minutes, 3:00pm-3:45pm; Submit the paper not later than 4:00pm)

Question 1 (2.0 points): Indicate whether statement below is True (T) or False (F)
According to the theory of comparative advantage, a country will export a good only
1 if Its productivity is higher in producing the good than the productivity of other
countries in producing it.
The Statement “Labor is not moved freely among countries” is not one of the theory
2
assumptions on comparative advantage developed by D. Ricardo
The statement “Both nations use the different technology in production” is not one of
3
the assumptions of Heckscher- Ohlin theory on the comparative advantage
An import quota is a non-tariff trade barrier that imposes a limit on the quantity of
4
commodities that may be imported
5 A tax of 50 cents on imports of shirts would be an example of a specific tariff
A nation that gains from trade will find its consumption point being located inside its
6
production possibilities curve
7 Benefits of a tariff on an imported commodity usually accrue to domestic producers
If each worker in Japan can produce either 40 bottles of wine or 40 yards of clothing
8 per hour and each worker in Australia can produce either 20 bottles of wine or 10
yards of clothing per hour, Japan has a comparative advantage in wine production

Question 2 (5.0 point): Explain the similarities and difference between an import tariff and
an import quota, and give examples?

Question 4 (3.0 points): Assume that the functions of a demand curve and of a supply curve of a
small country M for commodity X are Dx = 130 – Px and Sx = -10 + Px respectively. The unit
price of commodity X imported from the rest of the world is 10 USD in the condition of the free
trade. Draw the graph and calculate the increase of the producer’s surplus, the decrease of the
consumer’s surplus, and the government revenue if the country M would impose the import tariff
at the rate of 20% on the commodity X imported from the rest of the world?