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ECT721S - ECONOMICS OF TRADE - 2ND OPP - JAN 2023 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF HEALTH, NATURAL RESOURCES AND APPLIED SCIENCES
DEPARTMENTOF AGRICULTUREAND NATURALRESOURCESSCIENCES
QUALIFICATION: BACHELOROF SCIENCEIN AGRICULTURE(AGRIBUSINESSMANAGEMENT)
QUALIFICATIONCODE: 07BAGA
LEVEL: 7
COURSECODE: ECT721S
COURSENAME: ECONOMICSOF TRADE
DATE: JANUARY 2023
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY /SUPPLEMENTARY 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.
PERMISSIBLE MATERIALS
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
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
Question2
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
Question3
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
Question4
Suppose an electronic sells for NS 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
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Question5
What trade principle advocates for equal treatment
A. Rule of Origin
B. Most Favoured Nation
C. Quarantine
D. National procurement rule
Question6
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
Question7
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
Question8
Which of the following is an example of a monetary Union?
A. SADC
B. ECOWAS
C. European Union
D. SACU
Question9
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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
Question10
Mr Shitu imports dried meat into Namibia from South Africa. Namibia wants to restrict this
import, what type of trade instrument must she use?
A. Export restrain
B. Phytosanitary restrictions
C. Quota restrictions
D. Ad valorem tariff
Question11
The General Agreement on Tariffs and Trade (GATT)was established in
A. 1870 to protect U.S. industries and decrease world trade
B. 1921 to manage legal and accounting requirements for U.S.tariffs and quotas
C. 1947 to reduce trade restrictions among 23 countries
Question12
The World Trade Organization (WTO)
A. became, in 1995, the institutionalized and more comprehensive successor to the General
Agreement on Tariffs and Trade (GATT)
A. was established in 1947 to reduce trade restrictions among 23 member countries
C. was established in 1980 to oppose and counteract the policies of the General Agreement
on Tariffs and Trade {GATT)
Question13
The most-favoured-nation clause of the World Trade Organization requires that each
member must
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A. offer to all member countries the same trade concessions offered to any member country
B. choose one foreign member as its most-favoured trading nation, and give that country its
most generous trade concessions
C. offer some trade concession to any other member country offering it a trade concession
Question14
Regional trading bloc agreements
A. are not considered trade restrictions
B. are required by World Trade Organization rules
C. exist primarily in Russia, Africa, and South America
D. make special trade deals between countries in that region and discriminate against
countries outside the region
Question15
Which of the following is not used as an argument for trade restrictions?
A. emerging domestic industries, especially those with economies of scale, could not gain
entry into some world markets without protection during the early years
B. trade restrictions are required to prevent some countries from exporting a commodity at a
price below its cost of production
C. consumer surplus is maximized only when strict import tariffs and quotas ensure that
exports exceed imports
SECTION2 TRUEORFALSEQUESTIONS(5 MARKS)
1.
Trade restrictions other than tariffs, such as quotas, and export taxes, are prohibited
by World Trade Organization, True or False.
2
Imports of dairy products from countries that have not proven satisfactory sanitary
conditions are prohibited. True or False
3
Irradiation may not be applied on meat products, fresh fruits, spices and dried
vegetable seasonings as a requirement for conformity assessment related to Sanitary
and Phytosanitary rules. True or False
4
For vegetables, disclosure of information on the location of the farm, name of the
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farmer or fertilisers used may be required Sanitary and Phytosanitary rules. True or
False
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Salt level in cement, or Sulphur level in gasoline, must be below a specified amount.
This is a requirement for traceability. True or False
SECTION3 ESSAYTYPEQUESTION(80 marks)
Question 1
1.1 According to the trade theories, how would you explain the following concept
a.
External economies of scale
(2 Marks)
b.
Internal economies of trade
(2 Marks)
C.
Intra-Industry trade
(2 Marks)
d.
Inter-industrial trade
(2 Marks)
1.2 Distinguish between the following terms
a)
Free Trade Area and Custom Union
b) Trade creation and trade diversion.
c)
Regional economic integration and monetary union
(4 marks)
(4 marks)
(4 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.
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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. Discuss the role of each factor in creating a productive advantage that results in a
gainful trade.
(8 marks)
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 are the pre-conditions 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
When a buyer and a seller engage in a voluntary transaction, both receive something that
they want and both can be made better off.
4.1 Give reasons to explain why countries engage in trade.
{10 marks)
4.2. Countries trade more in one commodity than the other, explain the factors that
determine a nation's pattern of trad
{10 marks)
END
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