(a)[3]
(i) Explain one possible reason for the change in the world sugar price from 2011 to 2013.
(a)[2]
(ii) Explain one possible reason for the difference between the US sugar price and the world price of sugar shown in Table 1.
(b)[2]
(i) What is meant by ‘dumping’ in trade?
(b)[2]
(ii) Explain why Mexican producers might choose to dump their sugar into the US market.
(b)[2]
(iii) Consider how an economist would decide whether the claim that Mexican producers were dumping sugar in the US was justified.
(c)[3]
With the help of a diagram, explain the likely impact on the US raw sugar market if a minimum price above US$0.21 had been imposed in 2013.
(d)[6]
Consider who, if anybody, in the US and Mexico might benefit from a trade war, even though free trade has advantages.