Practise IB Economics HL 4.2.4 by analysing administrative barriers to trade, their effects on market outcomes and welfare using marked exam evidence.
Country X and Country Y are capable of producing both apples and bananas. Assume a two-country, two-product model.
Country Y has absolute advantage in the production of both apples and bananas, and comparative advantage in the production of bananas.
The market for oranges in Country Z is illustrated on Figure 5.
Figure 5
The domestic demand and supply for oranges are given by the functions
where P is the price of oranges in dollars per kilogram ( per kg ), Q d is the quantity of oranges demanded (thousands of kg per month) and Qs is the quantity of oranges supplied (thousands of kg per month). The world price of oranges is per kg.
Due to increased awareness of the possible health benefits of vitamin C , the demand for oranges in Country Z increases by 60000 per month at each price.
State one administrative barrier that Country Z could use in order to restrict imports.
Tanya is a currency speculator. She buys and sells currencies with the intention of making gains as a result of changes in the exchange values of currencies. Currently, she is holding US , but she expects that in the next few months the euro (EU€) (the currency of the eurozone) will appreciate against the US dollar (US$).
At present, EU€1 = US$1.20.