Suggested Answers of BT2 Revision Package - ASKnLearn

(b) Assess the extent to which supply factors, rather than demand factors, are themajor determinants of the pattern of trade between Singapore and the rest ofthe world. [15]Introduction§ Pattern of trade - a country’s volume of trade and the type of exports and imports§ Major trading partners of Singapore§ Exports and imports of Singapore 1. Supply factors• Comparative advantage Lower opportunity cost of producing certain goods and services relative to other countries à countries should specialise in the production of those goods they are more efficient in à lower unit cost of production Countries should import goods that they do not have comparative in as opportunity costs of producing these goods within country are higher • Factor endowment Relative abundance of specific factors of production à cost of the using these factors is lower • Technological advancement and innovation Lowers production cost and improve productive efficiency à lower unit cost • Factor productivity More productive à returns on factor higher à lower unit costL3L2Knowledge, Application, Understanding and AnalysisA well developed analysis on result of immobility of factors of production ontrade.Able to explain to some effect of immobility of factors of production on trade, butnot well developed.L1 Smattering of valid points on immobility of factors of production or trade. 1-47-105-62. Demand factors• Incomes Emerging economies, e.g. China and India