Text B, Paragraph 1
Kenya has been focusing on sectors where it is believed to hold a comparative advantage. Recent investments in these areas are expected to increase the country’s competitiveness on the global market.
Define the term comparative advantage as indicated in bold (Text B, Paragraph 1).
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Text C, Paragraph 2
Malaysia can produce either 200 tons of rubber or 100 tons of palm oil. The government has decided to concentrate more resources on rubber production.
Calculate the opportunity cost of producing 1 tonne of rubber in terms of palm oil as found in (Text C, Paragraph 2).
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Text E, Paragraph 2
South Africa’s government is encouraging industries where the country holds a comparative advantage. These sectors are expected to play a key role in boosting exports and increasing national income.
State two advantages of comparative advantage as indicated in bold (Text E, Paragraph 2).
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Text C, Paragraph 3
Australia’s agricultural sector has benefitted from economies of scale, allowing producers to lower costs and remain competitive in the global market. This has strengthened the country’s position as a leading exporter.
Define the term economies of scale as indicated in bold (Text C, Paragraph 3).
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Text D, Paragraph 3
Despite focussing on sectors with a comparative advantage, some economies remain vulnerable to changes in global demand, highlighting the limitations of this approach.
State two limitations of comparative advantage as found in (Text D, Paragraph 3).
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Text E, Paragraph 3
The government of New Zealand is reviewing its terms of trade as part of its strategy to respond to fluctuating export and import prices in key industries.
Define the term terms of trade as indicated in bold (Text E, Paragraph 3).
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