TUTORIAL 1

Chapter 1, 2 & 3


1. Using diagram, explain the concept of Gravity Model.
(5 marks)

2. Define globalization. Elaborate the three (3) periods of globalization.
(10 marks)

3. Using your own numerical example, explain the concept of absolute advantage.

(5 marks)

4. Based on the table below, explain the concept of comparative advantage considering the
conditions of before trade, specialization, after trade and gain/loss due to trade activity.
Assume that both countries use constant Production Possibility Frontier (PPF).

Product X Product Y
Chile 180 120
Denmark 80 80
Agreed ratio = 140x : 140y
(10 marks)

5. Describe four (4) characteristics for the Labour Theory of Value.
(10 marks)

6. Define Production Possibility Frontier (PPF). Describe the three different types of PPF.

(7 marks)

7. Define and explain the concept of Indifference Curve (IC).
(3 marks)


TOTAL = 50 marks