Economics · 2016 · May · Paper 2 · SL · Question paper

M16/3/ECONO/SP2/ENG/TZ0/XX Economics Standard level Paper 2 © International Baccalaureate Organization 2016 9 pages Instructions to candidates yy Do not open this examination paper until instructed to do so. yy You are not permitted access to any calculator for this paper. yy Section A: answer one question. yy Section B: answer one question. yy Use fully labelled diagrams and references to the text/data where appropriate. yy The maximum mark for this examination paper is [40 marks]. 1 hour 30 minutes 2216 – 5113 Tuesday 3 May 2016 (afternoon) – 2 – Section A Answer one question from this section. 1. Study the extract below and answer the questions that follow. US steel  With trans-Pacific and trans-Atlantic trade talks missing deadline after deadline, the United States (US) government is putting new tariffs on steel imports. This action will raise prices for many US firms, threaten domestic energy production, and upset trading partners worldwide.  Last week, the US Department of Commerce imposed tariffs on hundreds of millions of US dollars worth of annual trade with South Korea and eight other countries, including India, Taiwan, Turkey and Vietnam. As punishment for allegedly dumping steel into the US market, South Korea’s exporters will face tariffs of about 10 % to 16 %, while smaller producers from other countries face rates up to 118 %.  In a preliminary review, the US International Trade Commission found a “reasonable indication” that US steel firms are being “injured” by foreign competitors’ low prices.  Low-priced steel from South Korea is good for American buyers but annoying for American producers who would rather have the market to themselves and charge higher prices.  Spokespersons for US Steel Corporation complain that steel imports rose 113 % between 2010 and 2012, with South Korean products accounting for half the increase. They blame dumping, but the better explanation is related to America’s energy revolution, where producers have taken advantage of two newly viable technologies: horizontal drilling and “fracking” to release gas and oil from rock formations. The resulting increase in energy production has been dramatic.