Economics · 2016 · November · HL · Question paper

N16/3/ECONO/HP2/ENG/TZ0/XX Economics Higher level Paper 2 © International Baccalaureate Organization 2016 9 pages Instructions to candidates y yDo not open this examination paper until instructed to do so. y yYou are not permitted access to any calculator for this paper. y ySection A: answer one question. y ySection B: answer one question. y yUse fully labelled diagrams and references to the text/data where appropriate. y yThe maximum mark for this examination paper is [40 marks]. 1 hour 30 minutes Thursday 3 November 2016 (afternoon) 8816 – 5104 – 2 – Section A Answer one question from this section. 1. Study the extract and data below and answer the questions that follow . American shrimp farmers taste victory  American shrimp farmers have received good n ews from a United States (US) ruling that could lead to tariffs being imposed on imports from competing countries.  US producers in the Gulf Coast were suf fering from a significant oil spill in 2010. The higher fuel costs as a result of the spill have made it hard to compete with foreign shrimp farms, which they say receive government subsidies. The US producers claim such subsidies threaten to destroy the domestic shrimp business. The US imported 1200 million pounds (lb) of shrimp last year and produced 100 million pounds (lb) of shrimp domestically .  The US Department of Commerce ruled that fiv e countries – China, Ecuador , India, Malaysia and Vietnam – improperly subsidized shrimp that were exported to the American market. The department rejected accusations of improper subsidies by Thailand and Indonesia, two of the biggest US shrimp suppliers.  The US International Trade Commission will no w have to decide whether the subsidies harmed the American industry . If so, the US would impose tarif fs on shrimp imports from the five countries. The proposed US tarif fs could be as much as 54.5 %.  The US shrimp farme rs claim that the Indian go vernment pays extra to cover shipping costs on shrimp going to the US and that China provides subsidized loans to its shrimp farmers. They argue that these violate W orld Trade Organization (WT O) rules.  The five countries dis puted the US