Topic 3: Trade (Exercise- IGCSE)

Question 1

Customs authorities impose tariffs and quotas.

(a) Analyse why tariffs or quotas are imposed on imported goods. (4)

-Answer-

Question 2

A Singapore business wants to purchase 500 bowls from a factory in Germany. Each bowl costs €22
(Euros). The exchange rate is €1.00 (Euro) = $1.84 (SGD - Singapore dollars).

(i) Calculate the cost in SGD of buying 500 bowls from the factory in Germany. You are advised to
show your working. (2)

-Answer-

(ii) State one possible impact on the Singapore business of a depreciation in the SGD. (1)

-Answer-

Question 3

Sweet Inspirations is a cake shop in Kenya. Flavourings and colourings for the cakes are not available
in Kenya so they are imported from other countries. Sweet Inspirations buys its flavourings and
colours once a month.

(i) Calculate the cost, in Kenyan Shillings (KES), to Sweet Inspirations of paying €2100 to a German
supplier.

One euro (€) = 121.44 KES

You are advised to show your workings. (2)

-Answer-

ii) The following month the exchange rate had changed to €1 = 125 KES.

State one effect this change in the exchange rate could have on Sweet Inspirations. (1)

-Answer-
Question 4

It is the tax on imports which increases production costs for foreign firms. Select one answer.

a) Tariff

b) Subsidy

c) Quota

d) Embargo

Question 5

It is the quantitative limit on the sale of a foreign good. Select one answer.

a) Tariff

b) Subsidy

c) Quota

d) Embargo

Question 6

What is the most likely effect of a U.S. import quota on foreign cars? Select one answer.

a) The price of domestic cars would decrease because of improved production methods.

b) Domestic automobile manufacturers would sell more cars in markets in the United States.

c) Foreign automobile manufacturers would be allowed to sell more cars in the United States.

d) The price of cars would increase in foreign countries because of the trade restrictions.