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QUESTION SEVEN
Use the following labour input requirements to answer the questions below:
Mask Sanitizer
Zambia 2 hours 6 hours
Malawi 3 hours 2 hours
a. What is the relative price of masks in terms of sanitizers in Zambia? In Malawi?
b. Where will the free trade price settle post trade? Who will export which good?
c. If the post-trade relative price of mask in terms of sanitizer is equal to 2/3, show what
happens to consumption of masks and sanitizers in Malawi and Zambia pre- and post-trade. Use
this information to calculate the wage in Malawi relative to Zambia post-trade.
d. Show that unit labor costs post-trade are consistent with the pattern of trade.
e. If you are able to graph the relative world demand and supply curves using all the above
information and solutions, kindly do so.
[15 marks]
QUESTION ONE
Given two countries, Zambia and Malawi that produce iron sheets and key holders. Zambia exports
iron sheets and imports key holders. Use an appropriate trade model to illustrate how national welfare
in Malawi is affected or changes. Suppose Zambia undergoes some recession and fails to produce iron
sheets such that her capacity to export gets affected drastically such that she becomes an importer of
iron sheets. What would be the effect of such a slump on ToT for Malawi? [10 marks]
what is the Price of U.S Coupon Bond issued in May 2018 and the Maturity date is May 2020 , with Par value $30 , yearly Coupon payments $5 ,and Interest Rate 7% ?
Explain the term “exchange rate pass-through”.
A firm has the following revenue and cost functions.
Determine the quantity level at which the firm maximizes its total profit.
(Hint: use marginal revenue = marginal cost rule) (
Explain the term price elasticity of demand? How is it measured? What factors influence market
demand for products? If the price elasticity is -3 and RM 100 is the marginal cost of product
X, what should be the optimal sale price?
(Hint: apply the mark-up rule)
what is the Price of U.S Coupon Bond issued in May 2018 and the Maturity date is May 2020 , with Par value $30 , yearly Coupon payments $5 ,and Interest Rate 7% ?
Rostow visited Korea multiple times and declared Korea was positioned in the age of mass consumption on his last visit in 1991. True/False
According to Rostow stage of model is it true that the middle stage is the stage of take-off
If a random variable has a probability density
𝑓(𝑥)={0 𝑓𝑜𝑟 𝑥≤0𝑘𝑥𝑒−4𝑥𝑓𝑜𝑟 𝑥>0
Then find k and the probabilities that it will take on a value
a) Between 2 and 4
b) Greater than ¼
