ECS3702 EXAM PACK 2025(International Trade)

ECS3702 EXAM PACK
2025

QUESTIONS AND
ANSWERS
For assistance contact
Email:

, lOMoARcPSD|31863004




PAST ASSIGNMENTS (MCQ)
2021 ASSIGNMENTS
1. International economics is concerned with
(1) The flow of goods and service and payments among nations
(2) Policies directed at regulating the flow of goods, services and payments
(3) The effects of policies on the welfare of a nation
(4) All of the above




2. An increase in the rand price of a foreign currency will usually
(1) Benefit South African exporters
(2) Benefit South African importers
(3) Benefit South African importers and exporters
(4) Harm South African importers and exporters

An increase in the rand price of a foreign currency indicates a depreciation of the
rand. Therefore, South African exporters will benefit as South African produced
goods are now cheaper.



3. According to the mercantilists, trade is a ----------------, however, subsequent trade
theories have argued that trade is a --------------------
(1) Negative sum game, zero sum game
(2) zero sum game, negative sum game
(3) zero sum game, positive sum game
(4) Positive sum game, negative sum game




4. The mercantilists’ argument was based on the idea that
(1) all nations benefited from trade

3

, lOMoARcPSD|31863004




(2) no nation benefited from trade
(3) a nation’s wealth and power were fostered most effectively by protecting
domestic producers from oversees competition
(4) a nation’s wealth and power were fostered most effectively by protecting the
wealthy from oversees competition

Mercantilists believed that protecting domestic producers from foreign
competition would foster increased exports and restrict imports. Increased
exports meant more inflow of gold and resulted in the nation becoming richer
and more powerful.



Use the information in the table above to answer questions 5 and 6 that follow




5. From the information in the table above
(1) South Africa has an absolute advantage in producing shoes
(2) Mauritius has an absolute advantage in producing headphones
(3) South Africa has an absolute disadvantage in producing headphones
(4) Mauritius has an absolute advantage in producing shoes

South Africa uses 10 labour hours to produce one shoe and Mauritius uses 60
labour hours to produce one shoe. Therefore, South Africa has an absolute
advantage in producing shoes as less labour is used to produce the same number
of shoes as Mauritius. Similarly, South Africa has an absolute advantage in
producing headphones, using the same reasoning as above. South Africa
therefore has an absolute advantage in producing both shoes and headphones.




4

, lOMoARcPSD|31863004




6. From the information in the table above
(1) Mauritius has a comparative advantage in producing shoes
(2) Mauritius has a comparative disadvantage in producing shoes
(3) South Africa has a comparative advantage in producing shoes
(4) South Africa has a comparative advantage in producing both shoes and
headphones

The opportunity cost of producing one shoe in South Africa is 2 headphones of
textile and the opportunity cost of producing one headphone in South Africa is 0.5
shoe. The opportunity cost of producing one shoe in Mauritius is 0.5 headphones
and the opportunity cost of producing one headphone in Mauritius is 3 shoes.
Therefore, South Africa has a comparative advantage in producing headphones
and Mauritius has a comparative advantage in producing shoes.



7. The commodity that a nation has the smallest absolute advantage
disadvantage in is its commodity of its
(1) Comparative advantage
(2) Absolute advantage
(3) Absolute disadvantage
(4) Comparative advantage




Assume that both Tunisia and Morocco produce coffee and cheese with the following
outputs. Use the tables below to answer the question 8

Scenario A




5