5. (a) The table below illustrates the Law of Comparative Advantage. Country Output (production per worker per week) Clothing Televisions South Korea 30 units 10 units China 40 units 20 units Total Output 70 units 30 units (i) State the Law of Comparative Advantage. (ii) Explain how both countries benefit from international trade in the above example. (iii) Calculate the terms of trade for both goods. (Show all your workings). (30 marks) (b) Discuss the economic consequences of a decrease in the value of the US dollar ($) relative to the euro (E) for the Irish economy. (20 marks) (c) It is becoming more difficult to attract Foreign Direct Investment (multinational companies) into Ireland. Discuss the economic reasons for this development. (25 marks) [75 marks] 6. (a) In each of the following distinguish between the terms: (i) 'progressive taxation' and 'regressive taxation'; (ii) "tax avoidance' and "tax evasion". (20 marks) (b) Outline the main functions of taxation. Explain, using an example, the meaning of the term "incidence of tax". (iii) Outline two reasons why the Minister for Finance regularly taxes goods such as alcohol, cigarettes and petrol in the Government's annual budget. (30 marks) (i) There has been a shift in focus by the Government away from direct taxation to indirect taxation. Discuss two economic advantages and two economic disadvantages of this situation for the Irish economy. (ii) Ireland must reduce its *carbon footprint" (i.e. level of greenhouse gas emissions from fossil fuels) by 20% over the next 12 years. Explain two ways in which the tax system could be used to meet this target. (25 marks) [75 marks]3. (a) Define the factor of production 'Enterprise'. (ii) Outline two characteristics which make 'Enterprise' a unique factor of production. (iii) Do all entrepreneurs earn the same level of profit? Explain your answer. (30 marks) (b) A computer software engineer, who earns (40,000 annually in her current employment, decides to become an entrepreneur and set up her own business in which she expects to earn (75,000 annually. (i) What is this entrepreneur's 'supply price'? Explain your answer. (ii) If the business performs as expected, will the entrepreneur earn an 'economic rent"? Explain your answer. (15 marks) (c) Public services are labour intensive and as a consequence the public sector wage bill accounts for a significant proportion of government current spending. (i) Explain why Marginal Revenue Productivity (MRP) might not be a suitable method for setting wages in the Public Sector. (ii) Outline an alternative method for determining wage levels in the Public Sector. (iii) Identify possible ways in which the Minister for Finance could reduce the Public Sector wage bill. (30 marks) [75 marks] 4. (a) (i) Define the terms Gross Domestic Product at Current Market Prices and National Income. (ii) Explain the relationship between these two terms. (30 marks) (b) The Circular Flow of Income for an open economy describes the flows that influence the level of National Income. (i) State and explain three leakages from and three injections into the Circular Flow of Income in an open economy. (ii) Outline the effect on the level of employment in the economy if leakages exceed injections. Explain your answer. (20 marks) (c) The Central Bank of Ireland has predicted a slower rate of economic growth for the Irish economy in 2008. Discuss the economic consequences of a slower rate of economic growth for Ireland. (25 marks) 175 marks]