Business 0450 · IGCSE · Business and the international economy
Business and the international economy — practice question
Raul runs a small orange farm in country Z. As with all primary sector activities, farming gives rise to external costs and external benefits. Raul sells all 600 tonnes of his oranges straight to a drinks manufacturer in country E. The Government of country E plans to bring in either import tariffs or quotas. Raul said: ‘This might help country E’s Government meet one of its economic objectives, but what effect will it have on firms that export to country E?’
(a)[2]
Define the term ‘primary sector’.
(b)[2]
Identify two government economic objectives.
(c)[4]
Outline one external benefit and one external cost that Raul’s business activity could generate.
(d)[6]
Explain two advantages to Raul’s business of selling straight to a manufacturer.
(e)[6]
Do you think that the introduction of import tariffs is likely to have a bigger effect than the introduction of import quotas on an exporting business? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Extracts natural resources and uses them to produce raw materials” …