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ECT721S - ECONOMICS OF TRADE - 1ST OPP - NOV 2022 |
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n Am I BI A u n IVE RS ITY
OF SCIEn CE Ano TECH n OLOGY
FACULTYOF HEALTH, NATURAL RESOURCESAND APPLIEDSCIENCES
DEPARTMENT OF AGRICULTUREAND NATURALRESOURCESSCIENCES
QUALIFICATION: BACHELOROF SCIENCEIN AGRICULTURE(AGRIBUSINESSMANAGEMENT)
QUALIFICATIONCODE: 07BAGA
LEVEL: 7
COURSECODE: ECT721S
COURSENAME: ECONOMICSOF TRADE
DATE: NOVEMBER 2022
DURATION: 3 HOURS
MARKS: 100
FIRSTOPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) PROFDAVID UCHEZUBA
MODERATOR: MR BEN HARASEB
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
PERMISSIBLEMATERIALS
1. Examination question paper
2. Answering book
THIS QUESTION PAPERCONSISTSOF 6 PAGES{Excluding this front page)
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SECTION1 MULTIPLE-CHOICEQUESTIONS(15 MARKS)
Question1
Which of the following statement is incorrect? International trade occurs because
A. Nations trade
B. Inter-Industries trade
C. Intra-Industries trade
D. There is specialization and differentiation
Question2
Greater inter-Industrial trade is an indication that
A. Countries have a greater number of factors of production
B. Countries have a similar number of factors of production
C. Countries have different number of factors of production
D. Countries have a smaller number of factors of production
Question3
Which of the following statement is incorrect? In an imperfectly competitive market, there is
A. Price discrimination
B. Homogenous pricing
C. Market segmentation
D. Market failure
Question4
Which of the following is an example of a profit-maximizing strategy?
A. Tariff
B. Tariff rate
C. Quota
D. Dumping
Question5
A firm in country A dumps chicken into country B, what is the demand curve for this firm in countries
A and B?
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A. The firm faces a downward demand curve in country A
B. The firm faces a downward demand curve in country B
C. The firm faces a horizontal demand curve in country A
D. The firm faces an upward demand curve in country B
Question6
A firm is guilty of dumping only if
A. It is subsidized
B. It is a low-cost producer
C. There is an injury to the country where dumping occurred
D. There is an arbitration to establish there is an injury to the country where dumping occurred
Question7
Dynamic increasing returns to scale implies
A. Dynamic external economies of scale
B. Dynamic internal economies of scale
C. Dynamic external trade integration
D. Dynamic external terms of trade
Question8
Mr Jones imports a commodity from Japan into Namibia, at the port, he paid 21% of the value of the
goods. This implies Mr Jones paid.
A. An import tax
B. A custom duty
C. A specific tariff
D. An ad valorem tariff
Question9
Which of the following statements is a correct effect of a tariff imposed by a small country?
A. The price of that good in a foreign country will not fall
B. The price of that good in a foreign country will fall
C. The price of that good in the domestic country will fall
D. The price of that good in foreign and domestic countries will not fall
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Question10
Suppose an electronic sells for N$ 6000 per unit in the market, and the factor cost of producing it is
N$2000. What value did electronics add to the industry?
A. N$1000
B.N$4000
C. N$8000
D.N$12000
Question11
What trade principle advocates for equal treatment
A. Rule of Origin
B. Most Favoured Nation
C. Quarantine
D. National procurement rule
Question12
Which of the following statement is incorrect about countries in a Free Trade Area?
A. They have a common external tariff
B. They charge no tariff for members
C. They have no common external tariff
D. Non-members may benefit from low or free tariff
Question13
A Chinese national imported textile into South Africa destined for Namibia. What duty should he pay
at the Namibia border?
A. No tariff because South Africa is in a Customs Union with Namibia
B. A tariff because China is not in a trade union with Namibia
C. A quota because South Africa is in a Customs Union with Namibia
D. A tariff because South Africa is in a Customs Union with Namibia
Question14
Which of the following is an example of a monetary Union?
A. SADC
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B. ECOWAS
C. European Union
D. SACU
Question15
Which of the following is not a value-adding property of the marketing system?
A. Place utility
B. Form Utility
C. Possession Utility
D. Consumer Utility
SECTION2 TRUEOR FALSE(5 MARKS)
1.
For a country to gain in trade, it must have a comparative advantage. True or False
2.
A country that has external economies of scale produce at least cost. True or False
3
A tariff will cause the price of goods to fall in a foreign country relative to a domestic country.
True or False
4.
Southern African Customs Union {SACU} is an example of a common market. True or False
5.
Trade restrictions other than tariffs, such as quotas, and export taxes, are prohibited by
World Trade Organization, True or False.
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SECTION3 ESSAY-TYPQEUESTIONS(80 MARKS)
Question1
When a buyer and a seller engage in a voluntary transaction, both receive something that they want
and both can be made better off.
1.1 Give reasons to explain why countries engage in trade.
(10 marks)
1.2. Countries trade more in one commodity than the other, explain the factors that determines a
nations pattern of trade
(10 marks)
Question2
Tariffs, import quotas, export subsidies and voluntary export restrain are instruments of
protectionism and trade restrictions.
2.1. Explain the effects of using them in the imposing nation on the
i)
Producer surplus
ii)
Consumer surplus
iii) Government revenue
iv) National welfare
(3 marks)
(3 marks)
(3 marks)
(3 marks)
2.2.
The theories of why trade occurs can be grouped into categories such as:
i)
Labour productivity
ii)
Differences in factor endowment
iii) Economies of scale
iv) Consumer preference
2.2.1. Discussthe role of each factor in creating a productive advantage that results in a gainful
trade.
(8 marks)
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Question3
3.1. The classical theory of Adam Smith advocates specialization and division of labour. What are
the benefits of specialization and division of labour?
(6 marks)
3.2. What is the pre-condition for achieving welfare increases due to specialization and division of
labour?
(4 marks)
3.3. Using examples (where necessary), explain the principles of comparative advantage
(2 marks)
3.4. What are the simplifying assumptions underlying the law of comparative advantage?
(8 marks)
Question4
4.1. Explain with reasons in support or against the following misconception about comparative
advantage.
i)
Free trade is beneficial only if a country is more productive than foreign countries (3 marks)
ii)
Free trade with countries that pay low wages hurts high-wage countries.
(3 marks)
iv) Free trade exploits less productive countries.
(4 marks)
4.2. What is a biased growth
(2 marks)
4.3. Illustrate with examples the difference between export and import-based
(4 marks)
4.4. Assume Country A has a comparative advantage in Cloth and Wine over Country B. Country B
has a less comparative disadvantage in Wine than in cloth. Explain how export or import-
biased growth can affect countries A and B.
(4 marks)
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