Name (Print): __________________________________ Name (Sign): ___________________________________ INTERNATIONAL ECONOMICS Introduction through HO...

Name (Print): __________________________________ Name (Sign): ___________________________________ INTERNATIONAL ECONOMICS Introduction through HO Model-- First Exam Spring 2004 1. Use the classical model of international trade to answer the following questions. A. (6 points.) Which country has absolute advantage in which good and why? Home has an absolute advantage in both goods because they can produce them more efficiently (fewer hours per unit). Home produces a bushel of S in 7 fewer hours than required in Foreign, and a yard of T in 2 less hours than required in Foreign. B. (6 points.) Which country has comparative advantage in which good and why? C. (6 points.) With 9000 hours of labor per year? What quantity of T will Home produce? Home"s comparative advantage in S implies complete specialization in S, producing 3000 bushels of S per year (found as 9000 hr/yr divided by 3 hr/bushel of S). D. (6 points.) With 10000 hours of labor per year? What quantity of T will For