ecs3702 exam pack answers 2021 2014 and 2021 brief notes
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University of South Africa (Unisa)
ECS3702 EXAM PACK ANSWERS AND 2021 BRIEF NOTES
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ECS3702 EXAM PACK ANSWERS
i i i
(2021 - 2014) AND 2021 BRIEF NOTES
i i i i i i i
ECS3702
INTERNATIONAL TRADE i
PASTEXAMPACKQUESTIONSANDANSWERS
i i i i i
(2019–2014) i i i
SUMMARISEDNOTES i
i 2021
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EXAMINATION MEMOS i
INTERNATIONAL TRADE i
ECS3702
MEMOS FROM 2019-2016
i i i
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Question i1a
Briefly iExplain ithe iFollowing iterms
(a) Absolute iAdvantage
Absolute i advantage i is i the i ability i of i a i country i to i produce i a i greater i quantity i of i a
i goodior iservice iwith ithe isame iquantity iof i inputs iper iunit iof itime, ior ito iproduce ithe isame
iquantity iof ia igood ior iservice iper iunit iof itime iusing ia i lesser iquantity iof i inputs, ithan
Assume ithat ithe icurrent idiscussion iin ithe icountry icenters ion ireducing ithe iflow iof
iChinese iapparel i into iSouth iAfrica ito ithe idebate i “should ithe iSouth iAfrica igovernment
1
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decide ito iimplement ia ilimit ion ithe iimportation iof iapparels ifrom iChina, iSouth iAfrica
iapparel iproduction iwould i increase iand ithe icountry i will ibe i better ioff”
The ieffective itariff irate iof iprotection iis ithe ipercentage iincrease i in idomestic ivalue
iadded iper iunit iof ioutput imade ipossible i by ithe itariff istructure. iIt iis ia i measure iof ithe itotal
ieffect iof ithe ientire itariff i structure ion ithe ivalue iadded iper iunit iof ioutput iin ieach i industry,
iwhen i both iintermediate iand i final igoods iare i imported.
Sometimes iit iis iconsidered ito ibe ideceptive iin iterms iof iprotection iaccorded ito idomestic
iproducers, ibecause iof ithe i implication ithat ito iimpose itariffs i on iboth i imported iinputs
iand ithe i final iproducts iof ithe i industry iis iself
defeating ias ithe itariff ion ithe iimported iinputs ireduces ithe ieffective itariff iprotection ion
ithe ifinal igoods.
(ii) Using ithe iformula ibelow, ishow ithat iit iis ipossible ifor ithe ithe ieffective irate iof
iprotection ito ibe i(a) inegative iand i(b) iequal ito ithe inominal itariff irate ion ithe
(5)
g=(t-aiti)/1-ai
where ig i= ithe irate iof ieffective iprotection ito iproducers iof ithe ifinal
icommodity it i= ithe inominal itariff irate ion iconsumers iof ithe ifinal icommodity
ai i = ithe iratio iof ithe icost iof ithe iimported iinput ito ithe iprice iof ithe ifinal icommodity iinithe
iabsence iof itariffs
ti i = ithe inominal itariff irate ion ithe iimported iinput
(a) Negative
If iti i is i20%, itherefore:
(b) Equal ito ithe inominal itariff irate ion ithe iconsumers iof ithe ifinal icommodity
iIf it i i is i10% i instead
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