May/June 2015
(A) Complete the following table using the information above.
Gold Tea
South Africa 4 20
Kenya 1 5
(B) Which country has an absolute advantage in the production of gold? tea?
Gold is South Africa that is 4 compared to 1 of Kenya.
Tea is South Africa 20 as compared to 5 of Kenya...
, May/June 2015
(A) Complete the following table using the information above.
Gold Tea
South Africa 4 20
Kenya 1 5
(B) Which country has an absolute advantage in the production of gold? tea?
Gold is South Africa that is 4 compared to 1 of Kenya.
Tea is South Africa 20 as compared to 5 of Kenya.
(C) South Africa and Kenya have equal advantage.in production of both goods. For
RSA 1g means a sacrifice of 5tea.the same for Kenya.
(D)No gains, because the countries have equal advantage .meaning the opportunity
costs are the same between the countries.
(E) The sacrifice made produce a unit of a good must be different. The country that
sacrifices less must produce the good whilst the one that sacrifices more to produce the
good must import it.
(E) What might make the two countries have different opportunity costs?
, Question 2
Use the figure below to answer question 2
(a) (i) What is the autarky price and quantity demanded and supplied?
ANSWER: 35
(ii) If the world price of good Q is R20 per unit, assuming free trade, calculate the total
quantity of imports
20000-1800=18200
(iii) With a tariff of r5 per unit, calculate the quantity of imports
12000-2000=10000
(b)With the above tariff imposed, how much is government revenue going to be:
10000*5=50000.
(c) If the government decides instead to impose an import quota and not a tariff, what is
the amount of quota that would produce the same effect on the amount of imports as
the above tariff? (5)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LOVELY01. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.00. You're not tied to anything after your purchase.
