Gce Model Questions Vol1 2020 Commerce Question 2

Practice essay / theory question 2 from the 2020 Gce Model Questions Vol1 Commerce examination. This question covers Trade, Terms of Trade, Tariff Impact .

Gce Model Questions Vol1 2020 Commerce Essay / Theory

Topics: Trade Terms of Trade Tariff Impact

Question 2 GCE_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • essay

Country X imports raw cotton and exports finished garments. The export price index for garments was 150 in 2020 and rose to 180 in 2021. The import price index for raw cotton was 120 in 2020 and rose to 150 in 2021.

Question Parts

( a )

Calculate the terms of trade for 2020 and 2021 and comment on the change.

( b )

The government imposes a 10 % tariff on imported raw cotton. Assuming the world price of cotton is ₦200 per kilogram before the tariff, calculate the new domestic price of cotton and discuss qualitatively how the tariff is likely to affect (i) the cost of production for garment manufacturers, (ii) the price of the final garment for consumers, and (iii) the overall terms of trade.

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About This Question

This is Gce Model Questions Vol1 2020 Commerce Question 2. It is one of the essay questions from the 2020 Gce Model Questions Vol1 Commerce examination.

The question covers Trade, Terms of Trade, Tariff Impact .

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