Economics

1. 1.

   Explain why a country with an absolute advantage in both goods can still gain from trade.

   [2 marks] · no calculator
2. 2.

   Fictional case: one worker-day produces either 12 cloth or 6 grain in Aro, and either 8 cloth or 8 grain in Beni. Calculate each country's opportunity cost of one cloth and identify comparative advantage in cloth.

   [3 marks]
3. 3.

   Fictional case: the exchange rate changes from 2 local units per dollar to 2.5. A machine costs 400 dollars with its dollar price fixed. Calculate its local price before and after, the percentage increase, and identify the currency movement.

   [4 marks]
4. 4.

   Fictional case: a tariff on imported steel helps domestic steelmakers but local appliance producers use imported steel. Analyse effects on both industries and consumers.

   [4 marks] · no calculator
5. 5.

   Fictional case: Lero relies on one crop export and proposes an infant-industry tariff for food processing. Evaluate the policy as a development strategy.

   [4 marks] · no calculator
6. 6.

   Fictional case: Mavi depreciates its currency to improve the trade balance, but imports essential medicines and exporters rely on imported components. Evaluate the likely outcome over time.

   [4 marks] · no calculator

Original, unofficial practice questions from SubjectScout — not official past-paper questions.