ECS3702 Assignment 2
(COMPLETE ANSWERS)
Semester 2 2025 - DUE 22
September 2025;
USER
[Email address]
, ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2025 - DUE 22
September 2025; Discuss the potential trade effects and subsequent
channels through which the covid-19 pandemic has affected a developing
economy such as South Africa. [5 marks]
QUESTION 2 Explain briefly In your own words why international trade is
important for a developing country. [10 marks]
QUESTION 3 Consider the following hypothetical scenario of two countries,
Togo and Mali. Table 1: Output per worker hour Output Togo Mali Cheese
(ton/hr) 20 10 Aircrafts (Units/hr) 60 20 (i) State the products of absolute
advantage and absolute disadvantage for both countries. You must explain
how you arrived at your answer. [5 marks] (ii) Determine comparative
advantage and comparative disadvantage for both nations, for both goods.
You must show your calculations and draw a conclusion based on your
calculations. Marks will not be awarded if workings are not shown. [6 marks]
4 (iii) From your answer in (i) and (ii) above, explain whether trade is
possible and the pattern of trade according to the classical theories. [6
marks] 5 Use the hypothetical scenario below to answer the questions that
follow Output Togo Mali Cheese (ton/hr) 60 10 Aircrafts (Units/hr) 40 20 (iv) If
Togo exchanges 60C for 60A with Mali, (a) How much does Togo gain in
terms of aircrafts? And how many hours does Togo save. Explain [2 marks]
(b) How much does Mali gain in terms of aircrafts? Explain [3 marks] 6 (c)
What is the range of mutually beneficial trade? Explain how you arrived at
your answer [4 marks]
QUESTION 4 Nigeria is a labour abundant nation and Japan is a capital
abundant nation, producing and consuming palm oil and computers, using
both labour and capital. Palm oil is labour intensive. Both nations experience
increasing costs in their production. Explain the basis of and gains from trade
for both countries using well drawn diagrams. [15 marks]
QUESTION 5 Palm oil is produced and consumed in Nigeria. The autarky
price of palm oil is N100, Nigeria producers of palm oil produce 500 tons of
palm oil and consumers consume 500 tons of palm oil. The free trade price
of palm oil is N20. To protect domestic production and jobs, the Nigerian
government imposes a 20 percent ad-valorem tariff on imported palm oil.
Using partial equilibrium analysis and a well-drawn diagram, explain the
impact of this policy decision. [10 marks] International trade is an important
driver of economic growth for developed and developing countries alike.
There are numerous measures used to examine or measure how a country
performs when it comes to trade. This question is based on one of those
measures. 1. Define Terms of Trade (TOT) [1 marks] 2. How is the Terms of
Trade measured [2 marks] 3. Briefly explain what an improvement or decline
(COMPLETE ANSWERS)
Semester 2 2025 - DUE 22
September 2025;
USER
[Email address]
, ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2025 - DUE 22
September 2025; Discuss the potential trade effects and subsequent
channels through which the covid-19 pandemic has affected a developing
economy such as South Africa. [5 marks]
QUESTION 2 Explain briefly In your own words why international trade is
important for a developing country. [10 marks]
QUESTION 3 Consider the following hypothetical scenario of two countries,
Togo and Mali. Table 1: Output per worker hour Output Togo Mali Cheese
(ton/hr) 20 10 Aircrafts (Units/hr) 60 20 (i) State the products of absolute
advantage and absolute disadvantage for both countries. You must explain
how you arrived at your answer. [5 marks] (ii) Determine comparative
advantage and comparative disadvantage for both nations, for both goods.
You must show your calculations and draw a conclusion based on your
calculations. Marks will not be awarded if workings are not shown. [6 marks]
4 (iii) From your answer in (i) and (ii) above, explain whether trade is
possible and the pattern of trade according to the classical theories. [6
marks] 5 Use the hypothetical scenario below to answer the questions that
follow Output Togo Mali Cheese (ton/hr) 60 10 Aircrafts (Units/hr) 40 20 (iv) If
Togo exchanges 60C for 60A with Mali, (a) How much does Togo gain in
terms of aircrafts? And how many hours does Togo save. Explain [2 marks]
(b) How much does Mali gain in terms of aircrafts? Explain [3 marks] 6 (c)
What is the range of mutually beneficial trade? Explain how you arrived at
your answer [4 marks]
QUESTION 4 Nigeria is a labour abundant nation and Japan is a capital
abundant nation, producing and consuming palm oil and computers, using
both labour and capital. Palm oil is labour intensive. Both nations experience
increasing costs in their production. Explain the basis of and gains from trade
for both countries using well drawn diagrams. [15 marks]
QUESTION 5 Palm oil is produced and consumed in Nigeria. The autarky
price of palm oil is N100, Nigeria producers of palm oil produce 500 tons of
palm oil and consumers consume 500 tons of palm oil. The free trade price
of palm oil is N20. To protect domestic production and jobs, the Nigerian
government imposes a 20 percent ad-valorem tariff on imported palm oil.
Using partial equilibrium analysis and a well-drawn diagram, explain the
impact of this policy decision. [10 marks] International trade is an important
driver of economic growth for developed and developing countries alike.
There are numerous measures used to examine or measure how a country
performs when it comes to trade. This question is based on one of those
measures. 1. Define Terms of Trade (TOT) [1 marks] 2. How is the Terms of
Trade measured [2 marks] 3. Briefly explain what an improvement or decline
