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International Economics I Question Paper

International Economics I

Course:Bachelor Of Economics And Mathematics

Institution: Kabarak University question papers

Exam Year:2008

INSTRUCTIONS:
1. Answer question ONE (Compulsory) and any other TWO questions.
Question ONE
Using diagrams where necessary, distinguish between the following paired concepts.
a) Consumer indifference curve and community indifference curve (4 marks)
b) Demand curve and reciprocal demand curve. (4 marks)
c) Gains from exchange and gains from specialization. (4 marks)
d) Production equilibrium and consumption equilibrium (4 marks)
e) Production possibilities frontier and consumption possibilities frontier.
(4 marks)
QUESTION TWO
Explain,
a) The assumptions of the comparative advantage theory (11 marks)
b) The possibility of trade for the following two countries given the production costs
Country Cost per Unit of X Cost per Unit of Y
A Shs. 80 Shs. 100
B $ 4.00 $ 8.00
(9 marks)
c) The gains from trade between the two countries. (5 marks)
QUESTION THREE
a) Using offer curves explain how two countries can arrive at equilibrium when trading
two commodities. (6 marks)
b) Explain why expansion of trade beyond some level of the offer curve may not be
beneficial to a country (6 marks)
c) Using the Neo-classical Theory of international trade show how two countries with
identical production possibilities can trade and gain from such trade. (13 marks)Page 3 of 3
QUESTION FOUR
Explain the following theorems using relevant diagrams and examples:
a) The Linder Theory (5 marks)
b) Immiserizing growth (5 marks)
c) Rybczynski Theorem (5 marks)
d) Factor Price Equalization Theorem (5 marks)
e) Stolper-Samuelson Theorem (5 marks)
QUESTION FIVE
a) Explain Krugman’s major contribution to international trade that earned him the Nobel
Prize (5 marks)
b) Discuss the possibility of an ultra anti-trade consumption effect of growth in Uganda’s
electricity industry. (5 marks)
c) Briefly discuss five methods of protectionism. (15 marks)

International Economics I Question Paper

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