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Econ 412: International Economics Question Paper

Econ 412: International Economics

Course:Bachelor Of Science In Economics And Mathematics

Institution: Kabarak University question papers

Exam Year:2009

COURSE CODE: ECON 412
COURSE TITLE: INTERNATIONAL ECONOMICS
STREAM: Y4S1

INSTRUCTIONS:
Answer any THREE questions.
QUESTION ONE
Explain,
a) The theory of comparative advantage according to Ricardo. (4 marks)
b) Briefly five methods of protectionism. (10 marks)
c) The possibilities of trade and gains from trade by the following three countries (A,
B and C) producing two commodities, Textiles (T) and Wheat (W)
Country Cost per unit of T Cost per unit of W
A 10 15
B 15 20
C 5 2.5
(9 1
/3 marks)
QUESTION TWO
a) Using the graphs and examples:
i) Derive an offer curve (6 marks)
ii) Discuss how two countries, can arrive at an equilibrium when trading
two commodities, tea and electricity (6 marks)
iii) Explain why growth of trade beyond some level of the offer curve may
not be beneficial to a country (6 marks)
b) Using the Stolper-Samuelson theory explain the expectations concerning wages
and price of capital in Kenya and Japan if free trade was allowed in the long run.
(5 1
/3 marks)
QUESTION THREE
Discuss
a) Using graphs the concept of immiserizing growth as it would apply to a country
like Kenya. (12 1
/3 marks)
b) Briefly the assumptions underlying the Heckscher-Ohlin theory. (10 mks)
QUESTION FOUR
Using relevant diagrams and examples explain:
a) Rybczynski theorem. (5 1
/3 marks)
b) Factor price equalization theorem. (7 marks)
c) Heckscher-Ohlin theorem. (6 marks)
d) Leontief paradox (5 marks)
QUESTION FIVE
a) Briefly discuss five arguments against protectionist policies by Kenya in the
COMESA. (10 marks)
b) By use of graphs explain:
i) The four production effects of growth in Sudan’s petroleum industry
(7 marks)
ii) The four consumption effects of growth in Kenya’s cereals industry.
(6 1
/3 marks)

Econ 412: International Economics Question Paper

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