BW 041

A)     Define the following terms indicated in bold in the text

I)                    World Bank

Internal organization whose aims are too

-          Provide aid to developing countries

-          Reducing poverty levels

-          Encouraging and safeguarding international investments

II)                  Free Market

A free market is where prices and output are determined by supply and demand and the invisible hand

B)      Using an appropriate diagram, explain how a guaranteed price above the equilibrium price will benefit groundnut farmers

A supply and demand graph with a guaranteed price above equilibrium and an explanation that a guaranteed price above equilibrium may mean that farmers can earn higher income/ revenues

C)      Using an appropriate diagram, explain how the provision of hospital services has positive externalities

A marginal social cost/marginal social benefit diagram where there is a positive externality and healthcare benefits the economy because people are of better health

D)     Using information from the text/data and your knowledge of economic, evaluate fair trade as a means of improving the welfare of people in Malawi

Will improve-

1.       Better infrastructure and educational oppurtunities

2.       Economic security

3.       Higher income for farmers

4.       Can benefit from training

5.       There is greater demand for such products

6.       Increases living standards

Against-

1.       More needs to be done since Malawi is to poor

2.       Still be dependent on IMF and others

3.       Missalocatioon of resources

4.       There may not be a demand

5.       May become dependent of primary producs

6.       Could go to the super markets not Malawi