We have found evidence that an imaginary country called Frutopia is now exporting more fruit, and...

 

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We have found evidence that an imaginary country called Frutopia is now exporting more fruit, and importing more wood, than it used to do ten years ago. This change was not caused by government intervention. Answer all four parts of this question. a) Use the 'gravity model' to suggest several possible reasons for this changing pattern in international trade. (25 marks) b) Does this change give us a guide to which products Frutopia has a comparative advantage in? Explain how we can tell. (25 marks) c) Why might this change in imports have advantages in Frutopia? Who would we expect to benefit most? (25 marks) d) What problems might this changing international trade (in the last ten years) cause in Frutopia? Which groups of people are most likely to be worse off as a result of this change? Will such damage be permanent? (25 marks) We have found evidence that an imaginary country called Frutopia is now exporting more fruit, and importing more wood, than it used to do ten years ago. This change was not caused by government intervention. Answer all four parts of this question. a) Use the 'gravity model' to suggest several possible reasons for this changing pattern in international trade. (25 marks) b) Does this change give us a guide to which products Frutopia has a comparative advantage in? Explain how we can tell. (25 marks) c) Why might this change in imports have advantages in Frutopia? Who would we expect to benefit most? (25 marks) d) What problems might this changing international trade (in the last ten years) cause in Frutopia? Which groups of people are most likely to be worse off as a result of this change? Will such damage be permanent? (25 marks)

Answer rating: 100% (QA)

a The gravity model suggests that the force between two objects is proportional to the mass of the objects and in versely proportional to the square of the distance between them In the context of inte... View the full answer