firms n, consumption C and sales of an individual firm x. Moreover: ... (a) Suppose now that country H trades with two large countries, F and G, where. F is more ...
European Integration 2 Final exam, May 2012 Eleni Iliopulos Answer carefully to ALL the following questions/exercises. Do not write more than the required number of words. Explanations accompanying graphs are mandatory: graphs without explanations won’t be accepted.
Short questions (max 100 words each) - 3 points 1. What is the "…scal compact"? Explain. 2. December 2011: S&P places 15 EU countries on "…scal watch". List the main reasons. 3. What are the "big …ve"? Brie‡y explain their functions.
Questions (max 200 words each) –5 points 1. The Common Agricultural Policy: (a) Based on the S&D diagram, explain the functioning and the implications of the price ‡oor system. (b) Why di¤erent farmers’types were a¤ected di¤erently? (your explanation should be based on a graphical representation) 2. Rigidities in the labor market (base your answers on a graphical representation): (a) What are the implications of collective negotiations? (b) What are the implications of minimum wages? And during downturns?
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Exercise 1: the BE-COMP diagram - 5 points Consider now the BE-COMP framework studied in class. Answer to the following questions. 1. Draw the COMP curve and the BE curve in the usual diagram (number of …rms on the x-axis and mark-up on the y-axis). Including the graph with home demand. Assume that …rms produce with a constant marginal cost (MC) and a …xed cost of production (F). Draw the marginal cost curve (MC) and the average cost curve (AC) in a diagram (sales per …rm on the horizontal-axis and euros on the vertical-axis). Explain why the AC curve is downward sloping and what is the implicit assumption on the technology. 2. Now construct the full BE-COMP benchmark framework . Derive the equilibrium E in the Graph. Indicate the mark-up , the equilibrium price p, equilibrium number of …rms n, consumption C and sales of an individual …rm x. Moreover: (a) Use the graph to analyze the impact of the introduction of a government subsidy such that the number of existing …rms becomes 2n: Explain carefully the dynamics towards the new equilibrium on each graph. Call the new equilibrium variables: E1 ; 1 ; p1 ; C1 ; x1 : 3. Analyze the welfare e¤ects of the subsidy. Compare the pre-subsidy with the post subsidy situation. 4. Discuss the e¢ ciency of the result commenting on the dynamics of …xed costs.
Exercise 2: Small open economy –7 points Consider a small open economy H. Use the S&D and MS/MD framework to analyze the e¤ect of di¤erent tari¤s. More precisely: 1. Build the aggregate demand and supply curves in a graph where on the horizontal-axis there is the quantity consumed/produced and on the vertical one, the price of sales. Denote by P0 and Q0 , the initial autarky price and quantity, respectively. Build the MS/MD diagram. (a) Suppose now that country H trades with two large countries, F and G, where F is more productive than G in producing the good that H imports from both. Denote by Pf the price of the low cost country and Pg the price of the other one. Pot it on the S&D graph. (b) Country H imposes a tari¤ T towards both countries. Plot it on the S&D graph. 2. Suppose now that country H introduce a MFN trade liberalization with respect to both countries. (a) What are the equilibrium export/import quantities? What is the equilibrium price? Explain and show it on both the S&D and MFN diagrams. 2
(b) What are the welfare e¤ects of the MFN liberalization? Compare the initial situation with the post-liberalization one. (c) Comment on the e¢ ciency of this result. 3. Consider now a preferential liberalization with respect to the high cost country, G. (a) What are the equilibrium export/import quantities? What is the equilibrium price? Explain and show it on both the S&D and MD/MS diagrams. (b) What are the welfare e¤ects of the PTA liberalization? Compare the initial situation with the post-liberalization one. (c) Comment on the e¢ ciency of this result. 4. Suppose now that small country H only trades with one only area, the Rest of the World (RoW). Show graphically and explain how the introduction of a tari¤ can be equivalent of the introduction of a subsidy plus a consumption tax.
The schedule MD represents Home import demand curve; MS(FT) represents the import supply curve with free trade; XS(row) and XS(p) are the export supply ...
i) Varian, Microeconomic Analysis, W. W. Norton. ii) Wickens (2008), Macroeconomic Theory: a general equilibrium approach, Princeton. University Press.
Chacun a ses propres déclencheurs : il faut s'observer pour prendre .... progressivement leur sécurité intérieure et leur capacité d'autonomie, les deux sont ...
Nov 10, 2014 - By calculating European immigrants' share of the cost of government spending and their contribution to government revenues, the scholars ...
3. Introducing an MFN tariff into the framework. 4. Different types of trade barriers. E. ILIOPULOS (PSE, University of Paris 1). Microeconomics. Lecture 3. 2 / 26 ...
This course aims at providing an introduction to the standard literature on international trade and on the related policy issues. It analyzes the empirical and ...
Common agricultural policy. Eleni ILIOPULOS. PSE, University of Paris 1. Lecture 6. E. ILIOPULOS (PSE, University of Paris 1). CAP. Lecture 6. 1 / 26 ...
Can you show graphically that a small country (no impact of its demand on the world price) always has welfare losses from imposing a tariff? II. 4. Equivalence of ...
also last one or several periods. Models introduce a positive shock today and zero shocks thereafter. (with certainty). The solution does not require linearization, ...
14. She (crack) an egg open and (fry) it. She cracked an egg open and fried it. Exercice 3 ( /5 points). Transformer les phrases affirmatives en interrogatives et ...
The standard model stochastic setting complete markets: state contingent Arrow'Debreu assets. capital and adjustment costs productivity shocks. E. ILIOPULOS ...
2. State the Rybsczinsky theorem and represent it graphically on a graph with (L,K) ... French people are in favor of free trade with Germany but not with China.
Understand how we can extend the Heckscher$Ohlin model. ... The model: basic assumptions .... Transportation costs do not allow to equalize good prices.
transmission of shocks, the effects of monetary policy when banks are ... A monetary restriction reduces leverage, ... policy can only partly offset this effect. The.
basis for international trade statistics and trade negotiations. (basis to ... OECD: activities recorded depending on the technological intensity. E. ILIOPULOS ...
%2. . However, as firms increase the quantity produced, the marginal costs of production ... Suppose small country H has a comparative advantage in producing.
