HI5016 Final Assessment V5
HI5016 Final Assessment V5
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HI5016
INTERNATIONAL TRADE AND ENTERPRISE
FINAL ASSESSMENT
TRIMESTER T1, 2021
Assessment Weight: 50 total marks
Instructions:
All questions must be answered by using the answer boxes provided in this paper.
Completed answers must be submitted to Blackboard by the published due date
and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HI5016 Final Assessment T1 2021
Question 1
( 7 marks)
The Gravity Model
1. “The gravity model of international trade is able to predict trade flows
between two countries based on two principal factors.”
Describe the gravity model – specify the variables, use an example of Canada and
the USA, or Mexico and the USA – both situations where the gravity model has
been found to be accurate.
ANSWER: ** Answer box will enlarge as you type
Question 2
(7 marks)
Absolute and Comparative Advantage
2. Assume a world of two nations USA and Australia. The two nations produce
machinery and agriculture. The USA can produce 160 units of machinery or
200 units of agriculture while Australia can produce 140 units of machinery or
50 units of agriculture, in the same time period.
a. Define “absolute advantage” (1 mark)
b. Which country, Australia or USA, has an absolute advantage in the
production of agriculture and machinery? Explain the basis for your
answer (3 marks)
c. Which country – Australia or USA - has a comparative advantage in
production of machinery and agriculture? Define comparative advantage
and explain how it applies in this example. (3 marks)
HI5016 Final Assessment T1 2021
ANSWER:
Question 3
(7 marks)
The Standard Model
The Standard Model of Trade is a general model that accommodates other
models which reference specific sources of comparative advantage, e.g.
Ricardian model (differences in labour effectiveness) and Heckscher–
Ohlin model (references ‘factors of production’).
There are four key relationships upon which the Standard Model is based.
Please list each of the four relationships and give one example for each.
ANSWER:
Question 4
(7marks)
Controversies in Trade Policy
After the Seattle 1999 World Trade Organization (WTO) Ministerial Conference,
in the next two years, large anti-globalization demonstrations rocked the
International Monetary Fund and World Bank in Washington.
Describe the role of WTO with respect to the following 7 aspects: knowledge of
WTO/GATT, fostering trade liberalization, abolishing tariffs, increasing transparency,
seeking resolutions, improving communication within trading blocs, controlling
export subsidies, improving national welfare and competitiveness of developing
HI5016 Final Assessment T1 2021
countries (1 mark each)
ANSWER:
Question 5 (11 marks)
Instruments of Trade Policy
i. Evaluate the effects of an import tariff by the government of a small country.
Explain in detail the effects of an import tariff on the economic welfare of the
small country. (6 marks)
ii. Describe the potential advantages to
the economy if the government
offers an export subsidy (5 marks)
ANSWER:
HI5016 Final Assessment T1 2021
Question 6
(11 marks)
Different market structures
Assume you are graduating from Holmes Institute and that you want to begin a
business in Australia. You are aware that there are four different market
structures and that some structures are hostile to new products and services.
You decide upon Australia as a location for an Asian fast-food theme restaurant
because you have expertise in that sector and you believe that it will be popular. You
have also considered the four market structures: perfect, monopolistic, oligopoly and
monopoly competition. You decide on one of the structures.
a. Describe each of the four market structures and explain how each
one may be conducive to starting your new Asian themed small
business. (8 marks)
b. Suppose you start your business within a monopolistic market
structure. How is that structure advantageous to your proposed
business and how would it affect the future growth of your
business? (3 mark)
ANSWER:
END OF FINAL ASSESSMENT
Submission instructions:
Save submission with your STUDENT ID NUMBER and UNIT CODE e.g. EMV54897 HI5016
HI5016 Final Assessment T1 2021
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