Eduqas A Level Economics
Eduqas A Level Economics International Trade Exam Questions
Free Eduqas A Level Economics revision for International Trade: what you need to know, common mistakes and exam-style questions with answers. Covers absolute and comparative advantage, the advantages and disadvantages of free trade, protectionism, the WTO, globalisation and the UK's trade pattern.
Practise International Trade with past papers
Once you have learnt this topic, find the International Trade questions in real Eduqas A Level Economics past papers and mark them with the mark scheme. Doing lots of real questions is the quickest way to learn how examiners ask about each idea.
About Eduqas A Level Economics International Trade
International trade opens the Trade and Development section of the Eduqas specification. You need to explain why countries trade using absolute and comparative advantage, the terms of trade, and the advantages and disadvantages of free trade. You then analyse forms of protectionism (tariffs, quotas, subsidies, non-tariff barriers) with diagrams, and evaluate the arguments for and against them, including the role of the World Trade Organization. Globalisation covers specialisation, capital transfers, FDI and labour mobility, and trade and the UK asks you to identify the UK's main export sectors. Component 3 has a dedicated Trade and Development essay section, so this topic is heavily examined.
What you need to know
- Absolute and comparative advantage A country has an absolute advantage if it can produce more of a good with the same resources. It has a comparative advantage if it can produce a good at a lower opportunity cost. Trade based on comparative advantage raises total output.
- Advantages and disadvantages of free trade Free trade allows specialisation, lower prices, more choice, economies of scale and more competition. Disadvantages include structural unemployment in declining industries, dependence on imports and possible exploitation.
- Protectionism Tariffs (taxes on imports), quotas (limits on quantity), export subsidies and non-tariff barriers such as regulations. A tariff diagram shows a higher domestic price, more domestic output, fewer imports, tariff revenue and deadweight losses.
- Arguments for protection Protecting infant industries, strategic industries and jobs, preventing dumping and correcting current account deficits. Costs include higher prices, retaliation, inefficiency and a loss of welfare.
- The WTO The World Trade Organization promotes free trade through negotiation, sets trade rules and settles disputes between member countries.
- Globalisation Globalisation is the increasing integration of economies through trade, specialisation, capital transfers, FDI and international labour mobility. It brings growth and cheaper goods but also job losses in some sectors, inequality and environmental concerns.
- Trade and the UK The UK's major export sectors include services (especially financial and business services) and manufactured goods such as cars, aerospace and pharmaceuticals. Evaluate whether a more integrated world benefits the UK.
Common mistakes in International Trade
- Using absolute advantage to explain gains from trade. The gains come from comparative advantage, based on lower opportunity cost.
- Mislabelling the tariff diagram. Show world supply, the price after the tariff, the change in domestic output and imports, government revenue and the two deadweight loss triangles.
- Assuming protectionism always saves jobs. Retaliation and higher input costs can destroy jobs in other industries.
- Writing about globalisation only in terms of trade. The Eduqas specification also includes capital transfers, FDI and labour mobility.
Try three International Trade exam-style questions
1. Country A can produce 20 cars or 40 tonnes of wheat; Country B can produce 10 cars or 30 tonnes of wheat. Identify which country has a comparative advantage in cars and justify your answer. (3 marks)
Show the mark scheme answer
Opportunity cost of 1 car in A = 2 tonnes of wheat; in B = 3 tonnes of wheat; A has the lower opportunity cost, so A has the comparative advantage in cars.
2. Using a diagram, explain the effects of imposing a tariff on imported steel. (6 marks)
Show the mark scheme answer
Domestic price rises from world price to world price plus tariff; domestic supply increases; domestic demand falls; imports fall; government gains tariff revenue; consumer surplus falls and deadweight losses (production and consumption) occur; correct diagram.
3. Evaluate whether globalisation has benefited the UK economy. (15 marks)
Show the mark scheme answer
A strong answer would analyse benefits (cheaper imports, export markets for services, FDI inflows, economies of scale); then costs (deindustrialisation and structural unemployment, regional inequality, vulnerability to global shocks); use UK examples of export sectors; and reach a judgement on whether overall gains outweigh losses and for whom.
International Trade FAQs
What does Eduqas A Level Economics International Trade cover?
It covers absolute and comparative advantage, the advantages and disadvantages of free trade, protectionism and its effects, the role of the WTO, globalisation and the UK's trade pattern and major export sectors.
Which component is International Trade examined in?
It can be tested in Components 1 and 2, and it is a core theme for the Trade and Development essay section of Component 3.
What diagrams do I need for international trade?
You need the tariff diagram showing world price, the tariff, changes in domestic supply and demand, imports, tariff revenue and deadweight loss. A quota diagram and a comparative advantage table are also useful.
