Give detailed

(d) What is the Pareto-efficient level of output? Discuss how that level could be attained. What price would consumer pay, what price would producers receive? What would the consumers' and producers' sur- pluses be at this level? What would the total damage and total surplus be? By how much does the total surplus change given that the appropriate action has been taken by the authorities. 2pQUESTIONS On which rate would you deal in each of the problems below? 1. You have just received a 1,000,000 GBP payment. You want to convert these pounds into dollars. You get a quote of 1.5457/61. 2. You have to buy Australian dollars to make a large payment. The quote is .5535/37. 3. You need to make a SEK payment. You get a quote of 9.3854/9.3934. 4. You have received a large JPY denominated dividend which you want to convert into dollars. The quote is 123.19/23.1. You do a swap which has a near date of July 24th and a far date of July 25th. It is a: (a) short-dated swap (b) forward swap (c) it is called a 2. You do a swap which has a near date of August 25th and a far date of September 25th. It is a: (a short-dated swap (b) forward swap (c) it is called a 3. You do a swap which has a near date of July 25 and a far date of July 264. It is a: (a) short-dated swap (b) forward swap (C) it is called a4. You do a swap which has a near date of July 25h and a far date of August 27, 2003. It is a: (a) short-dated swap (b) forward swap (c) it is called a4. Assume we have two countries: CMU and S'v'C. two goods: X and Y. and two inputs: K and L. Assume further that the H0 assumptions hold. I is the labor intensive good. EMU is capital abundant. if free trade takes place, (35 minutes} _I | A. what will be the pattern of trade? B. what will happen to absolute and relative the relative input prices in CMU and SW: (intuitively explain your answer}? What is the relevant theorem called for this question? C. what will be the effect of trade on the distribution of income in (EMU [explain your answer intuitively =: you need not prove the Euler Theorem]? D. tf CMU is large and places a tariff on its import good and spends the tariff on good Y, what are the general equilibrium effects [i.e., tariff rate, tariff revenue. volume of trade, affect on input pricesr TOT. welfare. domestic production}, eta]? (Assume the Meltzer Paradox does not occur and explain your answer graphically using offer curves.) Does the StolpherSamuelson theorem hold {explain}? E. Draw the case of the optimal tariff for CMU. Now assume that growth takes place in EMU, such that 'li'ri'tl't 2- (l and the ML = D. F. Assume Clv'iU is small. Draw a graph depicting the consumption and production effects of growth on CMU. What theorem determines the shape of your graph? Does welfare improve (explain)? G. Now assume DMD is large and it incurs immiserizing growth. Draw a graph depicting the consumption and production effects of growth on Clv'lU. Does welfare improve (explain)? 5. What is the Leontief Paradox and how do differences in tastes explain it? (5 minutes} 6. Examine the partial equilibrium effects of a tariff for a small country {ill minutes} A. when there are no externalities. B. when the good produced generates positive externalities. C. Demonstrate that a subsidy causes less welfare loss than a tariff. 7. Domestic wine per bottle costs $10. and the imported grapes to make the bottle of wine cost $6. )All other inputs are domestic. What is the effective tariff rate on imported wine (\"l 0 minutes A. when a 10% tariff is imposed on imported wine? B. when a 10% tariff is imposed on imported grapes? I3. when a 10% tariff is imposed on imported wine and grapes? Final 1996 Carnegie Mellon University International Trade and Development Dr. GD You must do questions 1 anti 2. \"I . Evaluate the Clinton administration's recent trade negotiations with China. What are the key points of disagreement (include WTD in your discussion]? What resolutions have been proposed? What is the current status of the negotiations? Who are the key players in resolving trade relations? is there momentum toward free trade? What are the economic and political ramifications? Use both W3.) and articles assigned. (25 minutes) 2. Summarize and critically analyze the pro and con points of free trade. (See Henderson, Fontaine. Bhagwati and Kosters. Mussa, Krugman, McCulloch, Kenen,Will, Johnson, Riley. etc. and WSJ articles.) {35 minutes) You have you choice of doing question 3 or question 4. Do not do both. 3. What are the advantages and disadvantages (perceived or real) of trade blocks? Reference the articles by Lash. D'Quinn. Dori, Sweeney. Equiguren, and Falooff. {15 minutes] 4. What is the Leontief Paradox in reference to the H0 theorem? Present and discuss three explanations (one must discuss factor intensityr reversals}. Give graphical explanations where appropriate. (15 minutes} {a} Evaluate the operational utility of demand elasticity estimates, and outline any interpretations] difculties in the use of such estimates. {b} The annual demand function for a particular motor car is estimated as: -1o00010Pf3+l'2!1000 where Dnannual demand, P=price in 's and Y= average disposable income. (i) Given that the retail price cert year will be 12 000, whilst average disposable income is expected to be mill], esti- mate next year's annual demand. If the manufacturer receives 80% of the retail price for each car sold, estimate the manufacturer's revenue next year. (ii) Find the retail price to maximise manufacturer's revenue next year. (iii) If the marginal cost per car is estimated to be 6000, nd the price to maximise prot next year. {iv} In the subserluent year the retail price is expected to rise to 13111], whilst incomes should increase by 5%. Estimate demand and manufacturer's revenue for that year, and use this information to estimate the price and income demand elasticities. 'There is a simple relationship between advertising and protability: the most protable rms are the ones that advertise most. Therefore advertising must increase protability.' Discuss. Critically examine the proposition that as the contemplated future volume of output increases, the expected unit cost of output declines. Recommend a price and marketing strategy for the established automobile manufacturer seeking to enter the market for specialist competition motorcycles. Compare your recommendations to those for the automobile rm seeking to enter the volume small car market. An engineering rm about to undertake a production run of 2000 items must decide whether to overhaul the production machinery. Because the machinery is quite old, the cost of an overhaul is uncertain. However, after the overhaul the failure rate for the machinery is certain to be 0.01. Without the overhaul, the machinery has a failure rate with the probability distribution given below. Each defective item costs the rm 6 in hand nishing