QUESTION $1.(3$ Marks$)$

Which theories support free trade? Why can nations lose from trade? What are the main functions of tariff in developing nations? What are the deadweight loss of tariff?

QUESTION $2.(3$ Marks$)$

Explain why Mercantilism is still popular today. Give some examples of Neo Mercantilist nations.

Use the information in the table below to answer the following questions.

Output per Labourer per day

$\backslash$table$[[,$Italy,Germany$],[$Car$,10,15],[$Motorbike$,40,50]]$

a$.$ Which nation has the absolute advantage in each good?

b$.$ What is the opportunity cost for producing one of each product?

c$.$ Analyze comparative advantage and opportunities for trade between Italy and Germany