Economics · 2018 · November · Paper 2 · SL · Question paper

Economics Standard level Paper 2 9 pages Thursday 1 November 2018 (morning) 1 hour 30 minutes Instructions to candidates y Do not open this examination paper until instructed to do so. y You are not permitted access to any calculator for this paper. y Section A: answer one question. y Section B: answer one question. y Use fully labelled diagrams and references to the text/data where appropriate. y The maximum mark for this examination paper is [40 marks]. © International Baccalaureate Organization 2018 N18/3/ECONO/ SP2/ENG/TZ0/XX 8818 – 5113 Section A Answer one question from this section. 1. Study the following extract and answer the questions that follow. South Africa’s grain millers oppose corn tariff  A battle is taking place between South African corn farmers and the corn millers who process corn. Grain South Africa (Grain SA) is the organization that represents the interests of corn farmers. It has asked the country’s International Trade Administration Commission (ITAC) to protect local corn farmers from low global corn prices by imposing a tariff on corn imports.  South Africa’s corn millers are opposing the request by Grain SA to implement the tariff on corn imports. The corn millers argue that a tariff will cause a burden for consumers and cattle farmers. In South Africa, corn is an essential food and also a source of feed for livestock.  According to Reuters news service, South Africa is “Africa’s largest corn producer and is relied upon by neighboring Sub-Saharan nations to [reinforce] their own corn supplies and feed their people.” A drought in South Africa has dramatically increased the price of corn. In addition, the reduced supply has prompted the need for imports. “South Africa [has traditionally been] a net exporter of corn ... [but] for the second year in a row, [the economy] will become a net importer of corn.” The need to import corn has shocked both the corn farmers and the government.  The United States (US) is the world’s largest corn producer. An unusually large harvest has increased US supply and more than halved the price of US corn to its current price of US$145 a ton. However, in South Africa, because of the