Question one [Marks 8]

1. Define the following concepts as applied in agricultural trade:
2. Offer curve [2]
3. Marginal rate of transformation [2]
4. Opportunity cost of corn in terms of textiles [2]
5. Production Possibility Frontier [2]
6. Specialization [2]

Question two [Marks 26]

Answer the following questions based on the table below

Commodity	South Africa	Zimbabwe
Textiles (1 ton)	4	6
Corn (1 yard)	2	12

1. Assuming that labour endowment in South Africa and Zimbabwe are six and eighteen units, respectively, with the given labour requirements for producing corn and textiles in SA and Zimbabwe.
2. Provide production equilibrium equation for both countries. [4]
3. Calculate the maximum amount of corn and textiles that can be produced in SA and Zimbabwe. [8]
4. Plot a Production Possibility Frontier (PPF) graph for both countries. [4]
5. When price of corn is R200 and of textiles is R150. Calculate income for both countries. [6]
6. Plot a family of income lines with the same level of prices from the previous question. [4]