Waec Model Questions Vol1 2017 Economics Question 15
Practice objective / multiple choice question 15 from the 2017 Waec Model Questions Vol1 Economics examination.
Country X imports wheat and exports cotton. The world price of wheat is $2 per kg and the world price of cotton is $5 per kg. Country X currently imports 500,000 kg of wheat and exports 200,000 kg of cotton. The government imposes a 20% tariff on wheat imports and a 10% export subsidy on cotton. Assuming quantities imported and exported remain unchanged, calculate (a) the new terms of trade (ratio of export price to import price) after the policy, (b) the original terms of trade, and (c) the net fiscal effect on the government (tariff revenue minus subsidy outlay).
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About This Question
This is Waec Model Questions Vol1 2017 Economics Question 15. It is one of the objective questions from the 2017 Waec Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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