Neco 2024 Commerce Question 2

Practice essay / theory question 2 from the 2024 Neco Commerce examination. This question covers Trade .

Neco 2024 Commerce Essay / Theory

Topic: Trade

Question 2 NECO • 2024 • COMMERCE • essay

Country X imports wheat and exports cocoa. The following data are for the year 2023: - Wheat import quantity: 200,000 tonnes - World price of wheat: $250 per tonne - Cocoa export quantity: 150,000 tonnes - World price of cocoa: $1,200 per tonne - Exchange rate: 1 US$ = ₦450 - The government imposes a 10% ad‑valorem tariff on wheat imports. - Price elasticity of demand for wheat in Country X is –0.4. Using this information, answer the questions below.

Question Parts

( a )

Calculate the following:

( ) The nominal value of wheat imports and cocoa exports in Naira.

( ) The terms of trade index for Country X.

( b )

Determine the new domestic price of wheat after the 10% tariff and estimate the resulting change in quantity demanded using the given elasticity.

( c )

Discuss qualitatively how the wheat tariff influences Country X’s terms of trade and overall balance of payments, assuming export earnings from cocoa remain unchanged.

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About This Question

This is Neco 2024 Commerce Question 2. It is one of the essay questions from the 2024 Neco Commerce examination.

The question covers Trade .

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