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S5 Economics: International Trade Practice Paper 2
S5 Economics: International Trade Practice Paper 2
Ten items comparing opportunity costs, costing tariffs and exchange rate moves, and reading the trade balance and terms of trade, each with an answer and a one-line note.
Quick answer One machine costs country A 3 tonnes of rice but country B 5 tonnes, so A specialises in machines. A 400 dollar import with a 12.5 per cent tariff costs 450 dollars. Moving from 7.8 to 7.9 adds 100 Hong Kong dollars to a 1,000 dollar import.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 questions |
| Suggested time | 25 minutes |
| Difficulty mix | Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1 |
| Chapter | Chapter: S5 Economics: International Trade – Tutor Lesson Plan |
| Level | S5 |
02 Questions (10 items)
- FoundationCountry A needs 6 hours to make one machine and 2 hours to grow one tonne of rice. What is the opportunity cost of one machine?
- FoundationCountry B needs 20 hours for one machine and 4 hours for one tonne of rice. What is its opportunity cost of one machine?
- FoundationWhen a government imposes a tariff on imports, what happens to the price of similar locally sold goods?
- FoundationThe exchange rate is 7.8 Hong Kong dollars per US dollar. How many US dollars will 780 Hong Kong dollars buy?
- IntermediateThe opportunity cost of one machine is 3 tonnes of rice in country A and 5 tonnes in country B. By comparative advantage, which country should specialise in machines?
- IntermediateAn imported good is priced at 400 dollars before tariff and the tariff rate is 12.5 per cent. How much does the importer pay?
- IntermediateThe exchange rate moves from 7.8 to 7.9 Hong Kong dollars per US dollar. By how much does the Hong Kong dollar cost of a 1,000 US dollar import rise?
- ChallengeA place exports 60,000 dollars of goods and imports 75,000 dollars. What is its trade balance?
- ChallengeThe export price index is 120 and the import price index is 150. What is the terms of trade index, and is it better or worse than 100?
- Error redoA student argues that the country with the larger absolute advantage should produce everything. What does comparative advantage actually prescribe?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | 3 tonnes of rice | The opportunity cost is 6 divided by 2, which is 3 tonnes of rice. |
| 2 | 5 tonnes of rice | The opportunity cost is 20 divided by 4, which is 5 tonnes of rice. |
| 3 | It rises | A tariff raises import costs, so local prices rise and consumers pay more. |
| 4 | $100 | 780 divided by 7.8 gives 100 US dollars. |
| 5 | Country A | Country A gives up less rice per machine, so it should specialise in machines. |
| 6 | $450 | The tariff is 50 dollars, so the total is 450 dollars. |
| 7 | It rises by 100 Hong Kong dollars | The cost goes from 7,800 to 7,900 Hong Kong dollars, a rise of 100. |
| 8 | A trade deficit of $15,000 | Imports exceed exports by 15,000 dollars, so the balance is a trade deficit. |
| 9 | 80, worse than 100 | Terms of trade are 120 divided by 150 times 100, which is 80; below 100 means the terms have worsened. |
| 10 | Each country produces the good with the lower opportunity cost | Specialisation follows comparative advantage, so each country makes the good whose opportunity cost is lower for it. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
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