PART A ENVIRONMENTS QUESTION ONE 1a Define the components for a STEP checklist, giving examples within each category.

(5 marks) Chapter (2) The components for a STEP checklist are (social, technological, economic and political) factors. Examples: STEP Headings Typical STEP sub-categories Examples for corner grocery shop in village Social factors Demographic, values, lifestyle, age Catchments area, number of structure of population, class and people living nearby, number of income-structure of local population. families, age groups, car ownership Technological factors Equipment available, technologies, Availability of chop-display products. equipment, ATM, coding systems, stock keeping system. Economic factors Economic growth, inflation, market Economic growth, inflation, trends, local economic and market unemployment, competitors, circumstances. purchasing power of the buyers, pricing, demand and consumers, purchasing quantities. Political factors Legislation, regulations, policies, Friday opening legislation, opening likely developments hours, planning restrictions.

QUESTION TWO 1b: How does the STEP checklist help us to understand the business environment of ABC Enterprises? (8 marks)
The answer is open

Social factors: ABC Enterprises set up a Social Responsibility Department undertaking community projects such as setting up schools for the employees of its Vietnam factory. Technological factors: They decided to outsource their ordering centre to India. They looked to the
Far East to relocate their manufacturing, and to develop Project X, and found excellent opportunities in Vietnam. Economic factors: In 1998, a rival organisation (Mango Corporation) based in the USA launched a range of electronic toys which, although different to Project X, were aimed at the same market of 12-17 year olds in developed countries. Also, the main concern for ABC Enterprises at this time was the fact that the population aged 12-17 was getting smaller.

Political factors: the favorable political environment in India & Vietnam give ABC Enterprise chance to set the factories and ordering center out of Europe.

1c

why do some Governments consider information technology as critically important in their economic development strategy? Explain using materials from B200 environments, and examples. (12 marks) Chapter (23) The idea that we are moving toward an information society took root in the USA in the 1960's in the context of rising prosperity, the automation of the workplace, an age of economic plenty and on assumption that the demise of repetitive, unsatisfying work was imminent". **Daniel Bell identified three stages of economic progress: 1) The pre-industrial (dominated by agriculture). 2) The industrial (dominated by manufacturing). 3) The post-industrial (dominated by service sector) Three dimensions of the postindustrial society are relevant to the discussion of telecommunications: 1) The change from a good-producing to a service society. 2) The centrality of the certification of theoretical knowledge for innovation in technology. 3) The creation of new "intellectual technology" as a key of system analysis decision theory.

QUESTION THREE 3c How is business behaviour affected by globalisation? Explain, using materials from B200 environments, and examples. (12 marks)

Chapters (1&8) First globalization is the internationalizations of markets and corporations, has changed the way modern corporations do business. For example, Nike is manufacturing its athletic shoes in many Asian countries. Globalization should be seen in 4 terms: 1) Political 2) Technological 3) Cultural 4) Economic For Giddens, he takes the view that seeing the phenomenon of globalisation solely in economic terms is a mistake. He sees it as a complex set of processes with push and pulls effects. There are more driving forces at play than just economic ones. 1- Giddens feels that everything is the world is changing as a result of a phenomenon he calls "Globalization". 2- Giddens recognizes that people have different views about globalization.

A- The "skeptics" view the world as subject to a historical cycle of events. Globalization is just talk. B- The "radicals" argue that globalization is real. Giddens agrees with radicals who see globalization as a process providing a consistent pattern to some changes happening in the economic, political, cultural and technological fields. 3- Many business large and small are concerned with the phenomenon of globalization. For Rastogi, he identifies the main cause of globalisation as the growth in volume of investment which is now conducted internationally. This is supported by the development of new technology which first makes the capital funds needed for investment easier to transfer across the world. It then helps financial decision makers calculate profit if the investment is successful and even the probability of its success or failure. His interpretation of the economy is that it is increasingly dominated by a growing financial sector. Three major forces which have caused a truly global market: 1) Deregulation of trade and financial market, around the world, resulting in increased international capital flows. 2) Computing and communication technology have provided the platform for tremendous growth in the scale and complexity of financial market, thereby meeting the need for international flows. 3) Financial management innovations have produced an unprecedented number of innovations. QUESTION FOUR 4a The journey of natural capitalism involves four major shifts in business practices. List these four shifts, with a brief description of each. (5 marks) Chapter (26) 1- A dramatic increase in the productivity of the natural resources: In the first stage of company's journey toward natural capitalism, it might be done through redirecting the wastes of energy, water, materials and other resources through its production systems, and other operations: a) Implementing whole system design: Whole system thinking has helped many companies dramatically reduce such forms of waste as defect rate and inventory. Whole system can help managers find small changes that lead to big savings that are cheap and free. b) Adapting innovative technologies: The automobile industry for instance is due for a drastic technological change. 2- A shift to biologically inspired production models: This can be implemented through using a closed-loop manufacturing to create new products and processes that can be totally prevent waste. This plus more efficient

production processes could cut companies' long term materials requirements by more than 90% in most sectors. Closed loops production systems are designed to eliminate any material that incur disposable costs. 3- The move to a solutions-based model: The shift to a service business model promises benefits not just for participating businesses but to the entire economy as well. Adoption of the service model will reduce the volatility in turnover of capital goods that lies at the heart of the business cycle. 4- The reinvestment in Natural Capital: Reinvest in restoring, sustaining, and expanding the most important form of capital their own natural habitat and biological resource base. Natural capitalism try to join together ecological with economic goal in order to avoid the huge waste of natural resources and to build a new and prosperous world that benefits from a healthy climate. 4b Which of these shifts could be adopted by ABC Enterprises if they are to be seen as environmentally friendly? Explain why. (8 marks) A shift to biologically inspired production models: ex. "ABC Enterprises also expanded their manufacturing operations into Laos. In 2004 a chemical leak from the new Laos factory paint shop, which killed local wildlife and affected local water supplies was a major world news story, and ABC Enterprises were being cited as big polluters. "

QUESTION FIVE 5a: Define Hofstedes cultural dimensions, giving examples within each dimension to aid your definition. (5 marks) Chapter (15) Rating Power distance Uncertainty avoidance Individualism High Distant Risk avoiders Individualists Low Close Risk-takers Collectivists Feminine

Masculinity femininity Masculine

a) The power-distance dimension: The power distance dimension deals with the way superiors exercise power. In high power-distance cultures like Japan and China the boss "should try to look as powerful as possible". Inequality is accepted by the people. They consider powerful people as superiors and refrain from expressing disagreements. In low powerdistance cultures such as Sweden or Denmark inequalities are minimized. Superiors and subordinates behave with open mind and trust each other, practice team work and "consider each other to be colleagues and interdependent". b) The uncertainty-avoidance dimension: This dimension analyze the attitudes of people toward risk i.e. their tolerance to accept a certain degree of risk. The proportion of people who are risk averse is greater in developing countries like Tunisia and Portugal than in developed countries like Switzerland and Britain. High uncertainty-avoidance means that "people feel threatened by uncertain situations" and that they are subject to stress and anxiety in risky circumstances or projects. People in Tunisia and Portugal prefer to balance risk-avoidance by hard work, career stability and strict obedience to rules. On the contrary, for people in countries of weak uncertainty-avoidance, risk is more easily accepted, people are more pragmatic and more open to change. c) The individualism-collectivism dimension: In an individualist culture the entrepreneurship spirit is strong based on individual initiative and performance. A citizen of the US or of Britain "has the right to a private life and opinion". In a collectivist culture the group, the family or the clan prevail and not the individual. In Pakistan or Peru the accent is on being part of any type of organization, the emphasis is on willing to participate in a close social framework. d) The masculinity-femininity dimension: In "masculine" cultures money, material standards and performance are important criteria of success and of strength in countries such as Australia and Italy. In "feminine" cultures the quality of life, people and the environment are priorities. These factors are predominant in the Netherlands and Sweden, for example. In "masculine" cultures men take decision and dominate and women are expected to be caring and nurturing. 5

In "feminine" cultures the society is based on equality between the sexes.

5b

With regard to ABC Enterprises, which of Hofstedes cultural dimensions might apply? Explain why. (8 marks) 3 All Hofstedes cultural dimensions might be applied by ABC Enterprises because it is MNC and it can use all the dimensions as per the branch location in the world. 5c Using materials from B200 environments and examples, discuss the differences between the systems approach and the machine age approach. (12 marks) Chapter (22) Systems thinking reverse the Three-stage order of Machine-age thinking which are: 1) Decomposition of that which is to be explained 2) Explanation of the behavior or preparation of the parts taken separately 3) Aggregating these explanations into an explanation of the whole. In analyzed (machine age) thinking the thing to be explained is treated as a whole to be taken apart For example: University college department class student and subject matter. In the Systems approach there are also three steps: 1) Identify a containing whole (system) of which the thing to be explained is a part. 2) Explain the behavior or properties of the containing whole. 3) Then explain the behavior or properties of the thing to be explained in terms of its role(s) or function(s) within its containing whole. In synthesized (systems) thinking the thing to be explained is treated as a part of whole system. For example: subject matter student- class department- college and university.

Extra questions
6a Define the transformation model, what are the components of it? Giving examples within each component? (5 marks) Transformation Model: is a model shows the system as a set of process that transform a range of inputs into a range of outputs. For example: universities which transform students to graduated people.

Resources Materials Energy People Technology Information Expertise Capital

Transformation process

Goods & Services

6b:

How can you use the Transformation Model to understand the business model of ABC Enterprises? (8 marks) We can use transformation model to understand the business model of ABC Enterprises by: Inputs: (factories, labours, R&D, H.Q., regional offices, electrical components etc). Transforming processes (production, selling toys, researchetc). Outputs: project X toy, salaries, pollution as what happened in Laos, profitsetc). 7a: What are the two approaches that define the relation in power between State and Society and how do they differ? (5 marks)

Chapter (18) Putting the advances capitalist state (ACS) in perspective State in Perspective by McGrew Society centred approach: in the hands of the most powerful Society centred approaches emphasise the responsiveness of governments to interest and lobby groups and focus on the ability of the most powerful of these groupings (who gain privileged positions in the State) to shape legislation around their own objectives. This is often referred to as a PLURALIST approach to Government and is associated with modern liberal and social reformist thinking. State centred approach State centred approaches view the state as a separate entity from its constituent society, which develops power independently of that vested in it by society and builds a bureaucratic apparatus for the purpose of power-wielding. This is

known as a UNITARIST approach and is associated with conservatism and with Marxist adherents to the ideal of the communist state. Which is more beneficial? At first glance, a society centred approach might appear more beneficial as it implies that the government is more open to lobbying however it may also mean that certain business interests are according privileged group status. State centred approaches leave less room for lobbying on changes of policy, but may encourage businesses to forge direct relationships with the political party in government. This can lead to longer term stability. What is beneficial really depends on the type of firm as different types of business environment suit different types of firm. For example, an entrepreneurial firm may suit a loosely regulated fast changing environment, a firm involved in long term projects may prefer a climate with close ties to government. 7b: In which of these two approaches will ABC enterprise is likely to perform better and why? Explain. (8 marks)

State centred approach because it is a firm involved in long term projects and this kind of firms prefers a climate with close ties to government.

8c

Using materials from B200 environments and examples, explain the differences between government-business relations in Japan and Korea? (12 marks)

Chapter (19)
GOVERNMENT BUSINESS RELATIONS IN JAPAN The three major players: a) Bureaucracy The Ministry of International Trade and Industry, created in 1949 is the most dynamic and efficient government body operating in different areas such as: 1The conception of Japan's "industrial policy-making process", 2The country's strategies for development, 3The implementation of the structuring of industry 4And the "coordination of Japan's foreign trade and commercial ties".

The Ministry of Finance (MOF) is also a major player in developing Japan by using budgetary process, low credit cost and tax incentives. b) Business Institutions like the Japan Chamber of Commerce and Industry KEIDANREN influence government considerably with a well-known example being the merger of the Democratic Party and the Liberal party to create the LDP (Liberal Democratic Party) in 1955. The KEIRETSUS (the large industrial groups) are diversified in different industrial activities and constitute approximately one-third of the total economy. Then, the subcontractors and parts suppliers represent the bulk of the manufacturing companies in Japan, with usually less than a hundred employees c) The LDP The LDP guaranteed close and durable government-industry collaboration for the development of the Japanese economy. This political party is made up of several factions. It elects a president for two years who access automatically to the post of prime Minister "due to the LDP's majority in the Diet". The LDP plays a major role in bringing bureaucracy and business together and in maintaining a close relationship between the party and the two other members of the triangle. Bureaucratic who retire move into the LDP and into corporations in the Private sector. This triangular relationships between the LDP, bureaucrats and private sector are "characterized by interdependence" the practice of this relationship is not always easy because each member has it own special interests and because corruption is widespread, each side trying to benefit most. Industrial policy instruments The objective of industry in Japan changed after the war from "government industrial guidance model" to "private sector industrial guidance model" encouraging the organization to invest, innovate, produce and encouraged rationalization of output to boost the efficiency of production. GOVERNMENT BUSINESS RELATIONS IN SOUTH KOREA Government Domination The Korean government was always very active interfering in the economy and in business activities in the private sector. The government controlled commercial banks, monetary policy and credit. It also regulated prices and wages until the beginning of the 1980s and influenced entry or exit of private companies to and from a certain number of sectors in the economy.

The Korean government encouraged the development of export-oriented companies and granted them substantial advantages like favorable tax treatment. The law of Monopoly Regulation and Fair Trade limited corruption and monopolistic particles. The government favoritism was criticized in the mid- 1980s and its heavy intervention in the economy was also curbed due to public protest. Government and the birth of CHAEBOLS The Korean government used incentives and privileges to help CHAEBOLS develop and prosper. A number of measures were adopted to increase CHAEBOLS' wealth and influence such as: 1) The sale of "enemy property" (i.e. the Japanese industrial companies left behind in 1945) which helped several CHAEBOLS starts and expands their activities considerably. 2) The control of commercial banks credit 3) Cheap bank loans 4) Subsidized bank credit 5) Tax incentives and favorable tariff policy 6) Wage control 7) Control of labor unions. 8) Funding from government's development fund. Excessive indebtness with reasonable interest rates lowered the cost of capital but increased financial risk and the probability of bankruptcy of corporations. These advantages were added to the ones the corporations already benefited substantially from OTHER forms of government and financial help. The debt-equity ratio was very high and reached an amazing 14:1 for the Hanjin CHAEBOL (average: 5.1:1) The Role of CHAEBOLS The CHAEBOLS helped significantly to implement the industrial development policies and strategies of the Korean government. The CHAEBOLS were created by leaders exceptionally gifted, with broad vision and great will to achieve the objective of rapid growth and great wealth. This latter objective obliged the CHAEBOLS to enter into new kind of businesses and to search continuously for new opportunities into new products and new markets in order to maintain high growth rates. CHAEBOLS used to have monopolistic behavior but had also positive aspects on the overall economy because: 1) they were risk-takers daring to invest in vast risky projects, 2) they were "much less bureaucratic, more flexible and dynamic than large state enterprises"

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3) they competed successfully with multinationals 4) And they introduced rapidly and successfully new technology into the industrial sector.

PART B MARKETS
QUESTION ONE 1a Use diagrams to define the following terms: Movement along the demand curve Shift along the demand curve Chapter (3)

(5 marks)

A shift in demand curve: a shift in the entire demand curve-brought about by a shift in a non price factor. Movement along the demand curve: a change in quantity demanded- -brought about by a change in price of that good. ..... )( .... ) (

Q: Quantity Demanded P: Price

P1

P2 D 0 Q1 Q2 Q D1

Demand curve and Demand Curve shift

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1b

List some factors that could cause the demand curve for Project X from ABC Enterprises to shift. (8 marks) Table 3.4 page 71 Shift Factors of Demand: anything except price changes of that good that affects demand (and many things do) is a shift factor.

0 1

1- Increase the price of (substitute) goods. 2- (Complementary) goods price increase or decrease. 3- Increase the number of consumer and buyers. 4- Tastes and preferences. 5- Population size (12-17 years population).

1c State the law of demand and draw the demand curve, is there any exeptions? 68
Demand: what buyers are willing and able to purchase. The Law of demand: the quantity demanded is inversely related to the price other things constant. This relation could be represented by the demand curve (downward slop) see the figure down. Ceteris Paribus: other things constant (Income, Substitutes, complement, Taste, Future expectation regarding income and preference)

The exceptions are:

Veblen Goods: when prices goes up demand increase. Ex, Luxury goods Goods: Geffen Goods: when a price goes down demand goes down. Ex, Inferior goods in poor countries Goods:

1d Is the demand for project X is elastic or inelastic? Why? It is elastic, because the demand on their products has been changed due to the
substitutes made by the other companies like (mango). So the demand has fallen on project X.

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1e

Using materials from B200 markets and examples, explain how foreign direct investment (FDI) and multi national enterprises (MNEs) affect their host countries. (12 marks) Chapter (10)

Multinational Corporation: business that either own or control foreign subsidiaries in more than one country. (They invest in foreign countries). Foreign direct investment (FDI) is increasing in importance in the world economy. economy. The main distinction between direct and portfolio investments is that in the former the investor retains control over the invested capital. Direct investments and management go together. With portfolio investments, no such control is exercised. Here the investor lends the capital in order to get a return on it, but has no control over the use of that capital. capital. The consequences of MNE activity
1) Control: To host country this means parts of its industry will be controlled by foreigners. Some countries didnt accept that. One of obvious aspect of control that MNE want subsidiaries to operate their policies. (Restrictions on exports, R&D, money transfer) 2) External benefits of FDI to host a country: MNE offer benefits on the host country (training the local labor, if its free and use equipment and technology. If workers pay whether by money or law wages then external benefits reduced also, expenditure on the R&D.

Policy response in host countries: To FDI are far from uniform. Same of them with restriction and control on FDI on the operation of MNE like Canada. Same of them with it like UK. Export processing Zones (EPZs): Are designated areas within the host country intended to attract investment largely from foreign firms by offering favored treatment (absence of import controls). So tariffs are not levied on imported goods. (exemption from domestic taxation and industrial regulations) . - It required public investment from host country. - Objectives increase foreign exchange earnings, increase employments, and encourage transfer of technology and management skills.

Important Points * Host states find multinational investment advantageous in respect to employment creation, contribution to the balance of payment the transfer of technology and the contribution of taxation.

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Host state find multinational investment disadvantageous in so far as it creates uncertainty, foreign business can control the country within it, tax payment can be avoided by transfer pricing and MNC might misuse the environment. The benefits of MNC, to developing countries depend upon the developing countries development goals. MNCs bring with then investment, which is crucial to economic growth. They also provide the host state with foreign exchange, which might be crucial in helping purchase vital imports. MNCs might prove to be disadvantageous to developing economies if they drive domestic producers out of business, source production completely from other countries, practice transfer pricing to avoid tax, force host states to offer favorable tax deals or subsidies for further expansion, and guard technology to prevent its transfer to domestic producers.

* * *

QUESTION TWO 2a Using sentences and the equation, define the concepts of: Income elasticity of demand Price elasticity of demand Cross elasticity of demand Chapter (4)

(5 marks)

1- **price elasticity of demand: inverse relationship between price and the quantity demand. Price elasticity of demand = Percentage change in quantity demanded = % Percentage change in price = ((Q1-Q2)/(Q1+Q2)/2) / ( (P1-P2)/(P1+P2)/2) % (Q1-Q2)/(Q1+Q2)/2) (P1-P2)/(P1+P2)/2) If the price elasticity of demand is greater than 1 (>1) = elastic. If the price elasticity of demand is less than 1 (<1) = inelastic. If the price elasticity of demand is equal to 1 (=1) = unitary or unit elastic. If the price elasticity of demand is infinity () = perfectly elastic. If the price elasticity of demand is equal to (0) = perfectly inelastic.

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2-**income elasticity of demand: is the change in quantity demanded relative to the change in income i.e. the sensitivity of demand to changes in income. If consumers get an increase in income, their demand for some products may rise substantially, but their demand for other products may rise only very slightly. Income elasticity of demand = Percentage change in quantity demanded % Percentage change in income = ((Q1-Q2)/ (Q1+Q2)/2)/ ((I1-I2)/ (I1+I2)/2) % (I1+I2)/2) If the value is more than one (>1), demand is said to be income elastic.

High income elasticity is (Luxury) and low income elasticity is to be (necessities). - If the answer is between zero and one demand is said to be income inelastic. - If income elasticity of demand is negative (inferior products) so there is inverse products) relationship between income and demand (public transport) (public transport)

3-**Cross elasticity of demand or XED XED =Percentage in quantity demanded for product X Percentage change in price for product Y = ((D1-D2)/ (D1+D2)/2) / ((P1-P2)/ (P1+P2)/2) % %

- If XED is positive the two goods are in competition demand (substitute). - If XED is negative the two goods are in joint demand (complements). - If XED is zero the two goods are unrelated (independent goods).

2b

If Mango Corporation (the main competitor to ABC Enterprises) starts to produce a new substitute product for Project X at a lower price, how will this affect ABC Enterprises? Explain. (8 marks) The demand curve will move to the left

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The total income of ABC Enterprises will fall down. Because Mango Corporation is substitute to X Project 2c Schumpeter argued that large corporations have the competitive edge in introducing innovations. Discuss, using materials from B200 markets and examples. (12 marks) Chapter (6) 1- Schumpeter model (innovation, dynamism): Innovation in new products and new process. Ex; (computer). Innovation new products using new process of production. Capitalism a form or method of economic change and not only never is but never can be stationary **Schumpeter outlines his view of the evolutionary nature of capitalism where firms are forced to innovate in order to stay in the race. These firms which do not do this, or which fall behind in the race to innovate, will go out of business. Schumpeter refers to this competitive process of "innovate or go bust" as one of "creative destruction". This view of competitive markets as a dynamic process of continuous change. The key
to this process is the introduction of innovations, new products and new processes like motor car.

**Efficiency and Costs ***Cost reduction factors: 1-Innovation often depends on advances in technological knowledge so this 1-Innovation means that costs are reduced because advances in technological knowledge enable new production process to be used. This process called dynamic efficiency. So large firms are important because they have the fund and R&D. 2-Another source of reductions are economies of scale, which relate to the 2-Another scale, scale of operations of the firm. They produce cheap because they spread the fixed costs over a large scale of output. 3- Fixed costs are those costs remaining constant whatever the larger scale of costs output; these are usually the cost of buildings, land, and equipment. If fixed costs are spread over a larger output, then the large cost per unit produced will fall.

Monopolies in the market:

Corner Shop has monopoly over his neighborhood but has competition from hypermarkets As long there is freedom of entry, even local monopolies in short period will have to face competition from innovative. Natural monopoly where large scale of economies cant support by more than one supplier as this single firm can undercut all of its rivals. (Network industry such as telephone service or railway) With privatization of 1980s many of these companies transfer to private sectors.

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Government polices often include an attempt to regulate monopolies these policies include the monopolies and mergers commission nationalization and regulation. In the 1980 regulation and private ownership replaced nationalization for natural monopolies such as British Telecom and British Gas.

QUESTION THREE 3a: What are the six reasons for market failure described in the markets reader? Use examples to illustrate your answer. (5 marks) Chapter (7) 1) Where there are resources that can be used by everyone but belong to no one called common property resources. 2) Public goods, where consumption cannot be restricted to those who are willing to pay for them. 3) Externalities third party. 4) Asymmetric information. 5) Where needed markets do not exist 6) Where substantial monopoly power exists.

3b:

Which of these reasons might affect ABC Enterprises, and how might they solve it? (8 marks)
Where needed markets do not exist

"The organization is seeing reduction in its existing key markets and is being forced to seek out new ones". They solve it by searching for new markets. 3c: What are the similarities and differences between the US model of capitalism and the Japanese model of capitalism? Answer using B200 markets materials and examples. (12 marks) Chapter (12) 1) The US Model: *American capitalism is commonly regarded as individualistic and libertarian of all.
*Its financial system is highly market based, the returns it requires are very high, therefore it is important that US corporations can hire and fire their workforce freely to produce the profits their shareholders demand. *Unions are week. *Employment regulation is minimal and the turnover of workers is high. *There is a little spending on social welfare and levels of corporate and personal taxation are low.

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*There is tough anti-monopoly legislation, and the typical firm is owned by stock-holders.

2- Japanese model of Capitalism: 1- Concentrate is on people in order to build a strong relationship. 2- 'Peopolism' model is taking the people into consideration 3- The most dynamic Japan, the East Asian tigers and Chinese. Although there are variants within this wider culture, there is enough common general to attempt a descriptive synthesis under a common label. Here the attempt to capture the gains from co-operation in a competitive environment has been taken to its much extreme. 4- East Asian and particularly Japanese capitalist structures emphasis trust, continuity, reputation and cooperation in economic relationship. Competition is ferocious but co-operation is extensive. QUESTION FOUR 4a Draw a simple circular flow of income diagram. Chapter (5)

(5 marks)

H
LAB OR Wages

G&S

Consumer spending

F
4b Outline how ABC Enterprises has stimulated investment in developing countries. (8 marks)

4c:

From your study of B200 materials and examples, explain the methods governments use to protect their industries. (12 marks) Chapter (8) There are two main types of protection policies. Both cause the price of the imported goods to rise and its quality to fall. 1) Policies that directly raise price: Raise prices of imported goods by tariff (import duty affect foreign and domestic products and consumers). 2) Policies those directly lower quantities. a) Non-tariff barrier -- any implicit and explicit restriction on trade that does not involve tariff (quality standards).

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b) c)

Import quota: importing country sets the maximum of the quantity of some product that maybe imported each year. Voluntary export restriction (VER): is an agreement by an exporting country to limit the amount of a good that it sells to importing country.

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