Economics Mathematics & Economics Coursework Paper (Coursework Sample)

QUESTION ONE
The nation of Malawi is “small” and unable to affect world prices. It imports peanuts at the price of $10 per bag. The demand curve is: D=400-10P and the supply curve is: S=50+5P
Required:
Determine the free trade equilibrium (5 marks)

Using an appropriate illustration, show how Malawi would move from an autarky position and become either a net importer or exporter (10 Marks)
Show how an imposition of an import tariff would:
The increase in the domestic price. (5 marks)
The consumption distortion loss. (5 marks)
The production distortion loss. (5 marks)
(Total: 25 Marks)
QUESTION TWO
If tariffs, quotas, and subsidies each cause net welfare losses, why are they so common, especially in agriculture. (Hint: Make Reference to Common Agriculture Policy adopted by the European Union). (5 marks)
Suppose that country A is labour abundant and produces two products, tea and shoes. Given its production schedule, tea is capital intensive while while shoes is labour intensive. On the other hand, country B is capital intensive and exports its car intensive products on the international market. What would be the effect on the real income distribution within the economies if there were free trade on manufactured goods? Hint: Make reference to O-H model. (20 Marks)