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Econ 412: International Economics Y4s1 Question Paper
Econ 412: International Economics Y4s1
Course:Bachelor Of Science In Economics And Mathematics
Institution: Kabarak University question papers
Exam Year:2010
COURSE CODE: ECON 412
COURSE TITLE: INTERNATIONAL ECONONMICS
STREAM: Y4S1
DAY: MONDAY
TIME: 9.00 – 11.00 A.M.
DATE: 02/08/2010
INSTRUCTIONS:
Answer any THREE questions
QUESTION ONE
a) Briefly discuss five arguments for protectionism by Tanzania in the COMESA.
(10 marks)
b) Using community indifference curves prove that for two countries
i) with identical tastes but different production possibility frontiers, gains
from trade is still possible. (7 marks)
ii) with different production possibility frontiers but different tastes, gains
from trade is still possible. (6 1/3 marks)
QUESTION TWO
a) Using the absolute advantage theory explain the possibilities of trade and gains
from trade by the following three countries (X, Y and Z) producing two
commodities, Maize (M) and Clothing (C)
Country Units of labor per unit of M Units of labor per unit of C
X 1 3
Y 2 2
Z 3 2
(10 marks)
b) Using the Comparative theory of international trade explain the possibilities of
trade and gains from trade by the following three countries (Kenya, Japan and
USA) producing two commodities, Textiles (T) and Wheat (W)
Country Cost per unit of Wheat Cost per unit of Computer
Kenya KES 2,000 KES 25,000
Japan JYEN 10,000 JYEN 10,000
USA US$ 20 US$ 200
(23 1/3marks)
QUESTION THREE
a) Using offer curves:
i) Discuss how Kenya and China, can arrive at an equilibrium when
trading two commodities, coffee and automobiles (7 marks)
ii) Explain why growth beyond some level for Kenya may not be
beneficial (6 marks)
b) Explain using graphs why the offer curve technique is a better method of
explaining equilibrium of two countries trading compared to community
indifference approach. (10 1/3 marks)
QUESTION FOUR
Discuss
a) The Heckscher-Ohlin theorem in relation to Kenya as a labor abundant country
(5 1/3 marks)
b) The production and consumption gains to Kenya from trade with the European
Union. (8 marks)
c) The implications of Stolper-Samuelson theory on welfare gains of the labor force
in Kenya and why such welfare gain may not be realized. (10 marks)
QUESTION FIVE
Using relevant diagrams and examples explain:
a) Leontief paradox (5 marks)
b) Rybczynski theorem. (5 1/3 marks)
c) Factor price equalization theorem. (7 marks)
d) The welfare effects of a tariff in a small country. (6 marks)
e) Why increased tariffs may adversely affect Kenya’s. (6 marks)
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