2. Explain the Ricardian theory of international trade?

3. Explain the infant industry argument

4. Explain the advantages of fixed exchange rate

5. What are the objectives of Worlds Bank?

6. What are the various sources of foreign capital?

7. Explain the problem of subsides in WTO regulations.

8. Critically examine the Heckchsher theory of international trade.

9. Examine the effect of tariff in terms of partial equilibrium analysis.

10. What are the causes for disequilibrium in the balance of payment? Suggest measures to correct disequilibrium

11. Examine the role of IMF in Promoting international liquidity.

12. Explain the objectives and functions of W.T.O.

ou have been asked to provide budgetary information to the boardof Directors for a meeting where they will decide the pricing of animportant product for the next period.

The following information is available from the records:

You find that between the previous and current periods there was a4% general inflation rate and it is forecast that costs will furtherincrease by 6% in the next period.

The firm did not increase the selling price in the current periodalthough competitors raised their prices by 4% to allow for theincreased costs.

A survey by economic consultants was commissioned and has foundthat the demand for the product is elastic with an estimated priceelasticity of demand of 1.5. This means that volume will fall by one anda half times the rate of real price increase.

Required:

(a)Show the budgeted position if the firmmaintains a $13 selling price for the next period (when it is expectedthat competitors will increase their prices by 6%)

(10 marks)

(b)Show the budgeted position if the firm increases its prices by 6%

(6 marks)

(c)Write short report to the Board, withappropriate figures, recommending whether the firm should maintain the$13 selling price or raise it by 6%

(4 marks)

The activity matrix below shows the budget for the sales orderdepartment of Cognet Inc. Relevant information with regard to theoperation of the sales order department is as follows:

iA team of staff deals with existingcustomers in respect of problems with orders or with prospectivecustomers enquiring about potential orders.

iiThe processing of orders requires communication with the production and despatch functions of the company.

iiiThe nature of the business is suchthat there is some despatching of part-orders to customers which helpsreduce stock holding costs and helps customers in their work flowmanagement.

ivSales literature is sent out to existing and prospective customers by means of a monthly mail shot.

Cognet Inc has decided to acquire additional computer software withinternet links in order to improve the effectiveness of the sales orderdepartment. The cost to the company of this initiative is estimated at$230,000 pa.

It is estimated that there will be the following cost and volume changes to activities in the sales order department:

(1)Reduction in overall salaries by 10% per annum, applied to the existing salary apportionments.

(2)Reduction of 60% in the stores/supplies cost in the sales literature activity only.

(3)$20,000 of the computer software cost willbe allocated to the sales literature activity. The balance will beshared by the other activities in proportion to their existing share ofIT costs.

(4)Sundry costs for customer negotiation,processing of orders and implementing despatches will vary in proportionto the number of units of each activity. Sundry costs for salesliterature and general administration will be unchanged.

(5)Amended volume of activity will be: totalcustomers 2,600; customer negotiations 6,000; home orders 5,500; exportorders 2,000; despatches to customers 18,750.

(a)Prepare

summary of the amended activitycost matrix (per matrix above) for the sales order department afterimplementing the proposed changes.r