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ECONOMICS-2015: Daily Answer Writing Challenge – 9

ECONOMICS-2015: Daily Answer Writing Challenge – 9

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International Economics:

 

1) What is an offer curve? Draw two offer curves such that the offer curve of the home country has a section reflecting inelastic import demand and the foreign country’s offer curve is elastic throughout. Indicate in the diagram which portion of the home country’s offer curve is inelastic. What is the reason for this shape of the offer curve? Demonstrate the implications on trade of a tariff imposed on imports by the home country. (2013 – 10 marks)

 

2) What do you understand by a small open economy in the context of both goods and money markets? (2014 – 10 marks)

 

3) What is meant by factor abundance? How does it affect the shape of the production frontier of a nation? (2014 – 10 marks)