Neco Model Questions Vol1 2019 Commerce Question 2

Practice essay / theory question 2 from the 2019 Neco Model Questions Vol1 Commerce examination. This question covers Trade .

Neco Model Questions Vol1 2019 Commerce Essay / Theory

Topic: Trade

Question 2 NECO_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • essay

A Nigerian cocoa exporter intends to sell 10,000 kg of cocoa beans to a European buyer. The following data are given: - FOB price: $2.50 per kg - Exchange rate: ₦460 per US$1 - Export levy: 5 % of the FOB value (paid by the exporter) - Shipping and insurance cost: $0.30 per kg (added to the FOB value to obtain CIF) - Import duty (paid by the buyer): 10 % of the CIF value - Local transportation cost in Nigeria: ₦150 per kg (paid by the exporter) Answer the questions that follow.

Question Parts

( a )

Calculate the total revenue in Naira that the exporter receives after deducting the export levy and local transportation cost, but before the buyer’s import duty is paid.

( b )

Determine the effective export price per kilogram in Naira after all deductions (export levy and local transport).

( c )

Discuss two advantages and two disadvantages of the above trade policies (export levy, import duty, and local transport cost) for the exporter and for the Nigerian economy as a whole.

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About This Question

This is Neco Model Questions Vol1 2019 Commerce Question 2. It is one of the essay questions from the 2019 Neco Model Questions Vol1 Commerce examination.

The question covers Trade .

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