4QQMN510 King’s College London 代考

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4QQMN510 Economics for Business Final Exam__.pdf

King’s Business School, King’s College London

This paper is part of an examination and counts towards the award of a degree. Examinations are governed by the College Regulations under the authority of the Academic Board. Students must not share or distribute this examination paper.

4QQMN510 Examination 2023/24
Module Code and Title:
4QQMN510 Economics for Business Examination Period: Period 1, January 2024

Time allowed: For the written examination, students will have 2 hours to complete this paper. The paper will be available from 10:00AM UK Time on Thursday 11th January 2024. Students will need to submit their answers by 12:30PM UK time on Thursday 11th January 2024. We have allowed a grace period of 30 minutes for timed exams to allow time for scanning and uploading submissions.

INSTRUCTIONS TO CANDIDATES:
1. Answer question 1 and question 2.
2. Each question’s solution should be labelled clearly and kept separate from other solutions.
3. The presentation of your solutions must be clear and legible. Illegible solutions will not be graded.
4. Paste any required diagrams and graphs for your answers directly onto the answer sheet or uploaded photos for the written exam submission. Please do not produce the graphs using a software, you should draw them yourselves.
5. A template cover sheet has been provided on the KEATS page, you should complete the first page ‘cover sheet’ and then type your answers below for the written exam submission. Please ensure your candidate number is listed on the cover sheet in the candidate ID box and not your K number. Make sure you clearly indicate the questions you are answering (e.g. Section A, Question 1). Round up the answers to 2 decimals.
6. If you have a PAA cover sheet, you should include this in addition to your submission.
7. Save your work regularly, at least every 15 minutes.

ONLINE SUBMISSION INSTRUCTIONS:

1. Your answer sheet for the written exam submission should be submitted via the written exam submission link on the module KEATS page. King’s Business School, King’s College London

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2. Ensure your assessment is submitted with the title CANDIDATE ID – MODULE CODE- e.g. AE12345-4QQMN510

3. Once submitted please check you are satisfied with the uploaded assessment via the relevant submission link.

4. If you experience technical difficulties and are unable to upload your assessment by the deadline, please collate evidence of the technical issue and submit a mitigating circumstances form (MCF). Remember that the evidence must clearly show timestamps and proof that you attempted to upload your assessment before the deadline.

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Students must answer Question 1 and 2: Question 1:

John and Agnes live on beaches on two different islands. They each have eight hours to work in a day. John can make a Cape in 2 hours or make a Dish in 4 hours. Agnes can make a Cape in 4 hours or make a Dish in 2 hours. Both John and Agnes consume equal numbers of Capes and Dishes.

a) Clearly draw and label PPFs for John and Agnes and their consumption bundle in autarky, with Capes on the vertical axis, showing how you calculated this. Define and find the opportunity cost of a cape on each island and discuss how it can be represented on each PPF. Does John or Agnes have an absolute or comparative advantage in producing either Capes or Dishes? (15 marks)

b) Now suppose John and Agnes can freely trade at a price of 1 Dish per Cape. Explicitly calculate how much of each good John and Agnes will produce and consume. How much better or worse off in percentage terms are John and Agnes? How is this possible? (15 marks)

c) Discuss if both Free Trade and free flows of foreign direct investment (FDI) will always make everyone better off in the World Economy, providing examples where access to world markets has made people both better and worse off and explain why the logic of following comparative advantage did or did not work. (10 marks)

d) Citing the who, what, how, where and why, summarize an FT article or new story discussed in lecture or tutorial and summarize what the core economic

issue(s) involved are and why they are important. (10 marks)

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Question 1:

In the following exercise we consider the production and the long run growth of di↵erent economies. Our starting point is a simple model of the Cobb-Douglas production technology with a capital share in production of , and a labor share in production of .

(a)

(b)

(c)

(d)

(e)

The Cobb-Douglas production function can be written as Yt = KtLt. Express the labor share in production () in terms of the capital share of production () if we know that this production function exhibits constant returns to scale. Explain what constant returns to

scale means. (10 marks)

Inthisexerciseyoumaketwochangestotheproductionfunctionabove,inordertomakeit more useful for empirical testing and predictions. First, show how the adjusted production function looks like if we also consider total factor productivity (TFP). Explain why we think that it is a good idea to augment the production function with the TFP. Next, convert the adjusted Cobb-Douglas production function into per capita terms (assuming = 1 ). Explain why we might be more concerned about per capital output rather than total output.

(10 marks)

Let’snowcomparetwocountries(CountryAandCountryB).Weassumethatthecountries are identical in all dimension except their savings behaviour. Country A has a higher savings rate than country B. Determine which country has higher steady-state level of

capital and output using the Solow model represented by yt = Akt. (10 marks)

Consider now that you take a look at empirical data and find that country B has higher per capita GDP than county A. Explain the primary factor that the Solow model uses to understand why your prediction in part (c) might be di↵erent from the observed per capita

GDP. Give real life examples of this factor. (10 marks)

Let’s focus on country A and assume that the economy is in its steady-state. Now consider that the TFP in country A suddenly increases. Using the Solow Diagram, show how the economy adjusts to this structural change. Explain how capital per capita and output per

capita evolve over time. (10 marks)

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