Benefits from International Trade10 marks

Benefits of Trade• Wider choice

o Variety and quality• Lower Prices

o Causes higher PPP (big mac index)• Differences in resources• Economies of scale• Increased Competition

o Leading to greater efficiency• Domestic production and consumption to increase as a result of

specialisationo Which can lead to theory of comparative advantage

• Allows countries to acquire needed resourceso E.g. Singapore

• Encourages inter-dependence between countries => reduces possibility of hostilities & violence. 

• Can lead to Economic Growth

To what extent is it justifiable for Governments to resort to protectionism

15 Marks

How to answer:   • Define protectionism• Types of proctectionism

o Tariffs, quotas, subsidies, administrative barriers, health and safety, embargoes, environmental restraints, VER's

• Reasons for tariffso Protects domestic industries from foreign

competitiono infant industrieso Raises revenue for gvto Anti-dumping measureso Domestic producers would benefit - recieve higher

price & sell larger quantity. Leads to increased domestic employment. 

cont.• Reasons for other types of protectionism• Reasons AGAINST protectionism

o No consumer gaino Decreased efficiency - world price often lower than

'protected price'o Loss experienced by consumers is greater than

gain had by producerso Income distribution worsenso De-skillingo Foreign producers are worse offo Global misallocation of resources o Less choice for consumerso Less competitiveness in export markets

ConclusionUP TO YOU :)