Neco 2021 Commerce Question 2

Practice essay / theory question 2 from the 2021 Neco Commerce examination. This question covers Balance of Payments, Tariff, Export Subsidy, Terms of Trade .

Neco 2021 Commerce Essay / Theory
Topics: Balance of Payments Tariff Export Subsidy Terms of Trade
Question 2 NECO • 2021 • COMMERCE • essay

Country X imports wheat and exports cocoa. In 2022 the country imported 120,000 tonnes of wheat at an average world price of $210 per tonne and exported 45,000 tonnes of cocoa at an average world price of $2,800 per tonne. The exchange rate is ₦560 per US$1. The government imposes a 5% tariff on wheat imports and grants a 10% export subsidy on cocoa.

Question Parts

( a )
Calculate the total value of wheat imports in Naira before the tariff is applied.
( b )
Determine the tariff revenue collected by the government from the wheat imports.
( c )
Compute the effective price per tonne of wheat paid by importers after the tariff, expressed in both Naira and US dollars.
( d )
Calculate the total earnings from cocoa exports after applying the 10% export subsidy, expressed in Naira.
( e )
Discuss qualitatively how the wheat tariff and cocoa export subsidy together affect the terms of trade for Country X.

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About This Question

This is Neco 2021 Commerce Question 2. It is one of the essay questions from the 2021 Neco Commerce examination.

The question covers Balance of Payments, Tariff, Export Subsidy, Terms of Trade .

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