SECTION A

Read the Case Scenario And Answer All Questions That Follow

UK-US Travel Ban Hangs In Balance - Trade Weighs Heavy On PM's Mind

Despite the growing concerns over the outbreak of the deadly novel coronavirus in the United States and the United Kingdom, the Holness administration has acknowledged that the potential fallout from Jamaica's major trading partners has swayed the decision to delay a ban. That both countries have heavy concentrations of Jamaican migrants has also proven to be of consequence, Health and Wellness Minister Dr. Christopher Tufton revealed.

Tufton was responding to a question posed byThe Gleanerabout why the Government had delayed the imposition of travel restrictions on two of its main bilateral partners, which have reported an aggregate of more than 1,700 COVID-19 cases. Travel ties have already been cut with China, Italy, South Korea, Singapore, Iran, Spain, Germany, and France.

"There are other important variables that link both countries, so the United States, for example, the reality is that we depend on different types of relationships with that jurisdiction, trade relations, for example. A lot of imports, whether it's materials, medicine, food, or otherwise. Those have to be placed in the consideration as part of the risk assessment, and then, ultimately, a decision is made," Tufton said. He was speaking yesterday evening at an emergency press conference at Jamaica House in St Andrew, where the second imported case of COVID-19 linked to the United Kingdom was officially confirmed. On Tuesday, the first imported case of COVID-19, also linked to the United Kingdom, was confirmed. Tufton said that although the two confirmed cases thus far are linked to the United Kingdom, this was not enough cause to impose a travel ban given the rate of spread in that country.

"The decision around travel restrictions on different countries is based on a number of factors. First of all, the virus is present in over 120 countries, so that reason is not as significant anymore otherwise 120 countries would be banned or restricted. More importantly, it is about the extent to which the virus is present within that jurisdiction, and that is juxtaposed against the size of the jurisdiction, the country. Very importantly, it is a function of the rate of spread," he said.

Prime Minister Andrew Holness said: "As you should know, there are several considerations, but the Cabinet spent a long time discussing the issue, and it is something that is something that is of great concern to us now, but we don't want to act in a premature way. We don't want to act without fully contemplating all the issues. That's our obligation to the citizens of the country."

QUESTION 1 (CLO 5)

With reference to the case scenario, describe what is meant by the terms 'Ban,' 'Imports,' and

'Trade Relations.'

QUESTION 2

In the case, the Holness administration has acknowledged that"the potential fallout from Jamaica's major trading partners has swayed the decision to delay a ban."

Discuss this statementin light of any THREE(3) benefits of International Trade.

QUESTION 3

Outline three (3) arguments which have been raised against international trade.

QUESTION 4

The case outlined that "Travel ties have already been cut with China, Italy, South Korea, Singapore, Iran, Spain, Germany, and France."

Bearing in mind the importance of travel ties, advise the Minister of one measure he could take at this critical time.

SECTION B

QUESTION 5:

a)Explain the Law of Demand, and identify three (3) non-price factors that influence demand.

b)The following equations represent demand and supply conditions in a free market economy:

Qd = 2,000 - 15p;

Qs = 1,100 + 30p;

where Qd is quantity demanded; and Qs is quantity supplied; and P is price.

i.Calculate the equilibrium price and quantity.

ii. Calculate the quantity, if the price is $5 above the equilibrium price?

ii.Calculate the impact on the price, if there is a shortage of 300 units in the market?

QUESTION 6

Farmer John is in the business of poultry/chicken rearing. The input/feeding for his business cost $2,000 per bag of 40kgs each. Farmer John sells his chicken meat at $150 per kilogram.

The following table shows data pertaining to Farmer John's production of chicken meat for the month of May 2019.

Quantity of input

Total physical product (kgs)

Marginal physical product (kgs)

Average physical product (kgs)

Marginal revenue product ($ )

Profit ($)

0

0

1

28

2

72

3

132

4

200

5

260

6

312

7

350

8

368

9

370.80

10

360

11

330

12

288

Required:

(a)Complete the table above.

(b)Determine the profit maximizing level of input?

(c)At what point would it pay the firm to cease using the input.

Explain with example.

(d)Use the information in the table and explain how the Law of Diminishing

Marginal Returns applies.

(e)Referring to data in the table, explain the meaning of the 'Marginal Revenue

product' of an input.

QUESTION 7 -

Oligopoly is a market structure with a small number of firms.

Explain two (2) of the main characteristics of this type of market and briefly discuss the nature

of cartels, justifying why most economists consider them the worst form market forms.