Question 19M.3.HL.TZ0.2f
| Date | May 2019 | Marks available | [Maximum mark: 1] | Reference code | 19M.3.HL.TZ0.2f |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | State | Question number | f | Adapted from | N/A |
Country X and Country Y are capable of producing both apples and bananas. Assume a two-country, two-product model.
Country Y has absolute advantage in the production of both apples and bananas, and comparative advantage in the production of bananas.
The market for oranges in Country Z is illustrated on Figure 5.
Figure 5
The domestic demand and supply for oranges are given by the functions
Qd = 300 − 100P
Qs = − 60 + 60P
where P is the price of oranges in dollars per kilogram ($ per kg), Qd is the quantity of oranges demanded (thousands of kg per month) and Qs is the quantity of oranges supplied (thousands of kg per month). The world price of oranges is $2 per kg.
Due to increased awareness of the possible health benefits of vitamin C, the demand for oranges in Country Z increases by 60 000 per month at each price.
State one administrative barrier that Country Z could use in order to restrict imports.
[1]
Administrative barriers may include:
- requirements for packaging/labelling
- health/safety/inspection procedures
- changes in permitted specifications for a product
- increased bureaucracy.
Award [1] for stating one administrative barrier.
Any other reasonable response should be rewarded.
The term “administrative barrier” appeared to be unfamiliar to many candidates. “Quotas” was the most common response.
