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).
How did you do?
Did this page help you?
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).
How did you do?
Did this page help you?
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).
How did you do?
Did this page help you?
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).
How did you do?
Did this page help you?
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).
How did you do?
Did this page help you?
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).
How did you do?
Did this page help you?
Extract B, Paragraph 2
Indonesia's rice market has seen significant changes since joining international markets. The domestic price of rice was previously $800 per tonne, but the world price is $1,200. Local producers have responded by increasing production, while some consumers have reduced their purchases at the higher price. Agricultural analysts predict Indonesia could become a major rice exporter.
Using a demand and supply diagram, explain how access to world markets at a higher price might affect Indonesia's domestic rice market.
How did you do?
Did this page help you?
Extract C, Paragraph 3
Bangladesh's textile industry faces intense competition as the world price for garments is significantly below domestic production costs. Local manufacturers, previously protected by trade barriers, now compete with imports priced at $5 per unit compared to the domestic equilibrium price of $8. Consumer groups welcome the lower prices, though domestic producers express concerns about their future.
Using a demand and supply diagram, explain how access to world markets at a lower price might affect Bangladesh's domestic textile market.
How did you do?
Did this page help you?
Extract D, Paragraph 1
Costa Rica and Panama both produce coffee and pineapples. Costa Rica can produce either 100 tonnes of coffee or 200 tonnes of pineapples. Panama can produce either 80 tonnes of coffee or 120 tonnes of pineapples. Both countries are considering specialisation based on comparative advantage.
Explain which country should specialise in each product and use calculations to support your reasoning.
How did you do?
Did this page help you?
Extract C, Paragraph 2
India's technology sector has grown significantly due to its skilled workforce and lower labour costs. While the United States produces more software with fewer workers, India's opportunity cost of producing software is lower. The Indian government aims to leverage this advantage while addressing concerns about infrastructure limitations.
Explain the difference between absolute and comparative advantage using India's technology sector.
How did you do?
Did this page help you?
Extract D, Paragraph 1
Brazil has extensive natural resources, fertile land, and a large labour force. These factors have contributed to its strong position in agricultural exports. However, critics argue that focusing solely on natural resource advantages ignores potential gains from developing other sectors like manufacturing and technology.
Explain how different sources of comparative advantage might affect Brazil's international trade patterns.
How did you do?
Did this page help you?
Extract E, Paragraph 3
Vietnam's electronics manufacturing sector has grown rapidly but faces challenges from overdependence on foreign components and environmental concerns from increased production. While comparative advantage theory suggests further specialisation would be beneficial, policymakers worry about the negative impacts of comparative advantage.
Explain two limitations of comparative advantage theory.
How did you do?
Did this page help you?