Key term
Eduqas A-Level Economics A520QS
Scarcity, Choice and the Economic Problem
Topic overviewScarcity, choice and the basic economic problemThe factors of production and their rewardsOpportunity cost for individuals, firms and governmentEconomic goods, free goods and the three fundamental questionsThe production possibility frontier and its shapeMovements along and shifts in the frontierEfficiency, unemployed resources and the frontierSpecialisation, the division of labour and exchangeProductivity and how it is raised
Demand, Supply and Market Equilibrium
Topic overviewProduct markets and the objectives of economic agentsMarginal utility and the derivation of demandThe demand curve and why it slopes downwardThe conditions of demand and shifts in the demand curveSupply and why the supply curve slopes upwardThe conditions of supply and shifts in the supply curveEquilibrium price and output in a competitive marketShifts in demand and supply and the new equilibriumConsumer surplus, producer surplus and market welfare
Elasticities of Demand and Supply
Topic overviewPrice elasticity of demand and its calculationWhat determines price elasticity of demandPrice elasticity of demand and total revenueElasticity along a straight-line demand curveIncome elasticity of demand, normal and inferior goodsCross price elasticity of demand, substitutes and complementsPrice elasticity of supply and its determinantsElasticity and the incidence of taxes and subsidiesElasticity in decision-making by firms and government
The Labour Market
Topic overviewThe demand for labour and what shifts itThe supply of labour and what shifts itWage determination in a competitive labour marketThe elasticity of demand and supply of labourWage differentials and their causesLabour market flexibility and trade union powerWelfare payments, income tax and labour market performanceThe national minimum wageMigration and the labour market
Costs, Revenues, Profits and the Growth of Firms
Topic overviewPrices, profit and the allocation of resourcesThe short run, the long run and diminishing returnsTotal, average and marginal productFixed and variable costs in the short runAverage and marginal cost curves and their shapesTotal, average and marginal revenueEconomies and diseconomies of scale and the long run average cost curveProfit maximisation and the MC = MR ruleNormal profit, abnormal profit and economic profitInternal and external growth and types of integrationProductive, allocative, dynamic and Pareto efficiency
Market Structures
Topic overviewMarket structure, contestability and barriers to entryBusiness objectives and satisficingPerfect competition and its assumptionsShort run and long run equilibrium in perfect competitionThe efficiency of perfect competitionMonopolistic competition and its assumptionsShort run and long run equilibrium in monopolistic competitionThe efficiency of monopolistic competitionMonopoly and its assumptionsMonopoly compared with perfect competitionThe costs and benefits of monopolyOligopoly, interdependence and concentration ratiosPrice and non-price competition, collusion and price leadershipGame theory and the Nash equilibrium
Competition Policy and Privatisation
Topic overviewWhy governments are concerned about monopoly powerMerger control and market investigationsCartels, restrictive practices and abuse of dominanceCompetition authorities and how they workRegulating natural monopolies and the utilitiesContestable markets and barriers to entryThe limits of competition as a policy goalPrivatisation and the forms it takesEvaluating privatisation and the case for renationalisation
Market Failure and Government Intervention
Topic overviewMarket failure and economic efficiencyExternalities, welfare loss and the socially efficient outputPublic goods, free riding and property rightsMerit goods, demerit goods and information failureMonopoly power, factor immobility and volatile pricesTaxation, subsidies and tradable pollution permitsRegulation, state provision and information provisionMaximum and minimum prices in agriculture, housing and labourGovernment failure and distortions in marketsIncome inequality as a market failure
The Circular Flow and Aggregate Demand
Topic overviewThe circular flow of incomeInjections, withdrawals and equilibrium national incomeThe multiplierThe acceleratorAggregate demand and its componentsConsumption and savingInvestment and its determinantsGovernment spending and net tradeThe AD function: why it slopes down and what shifts it
Aggregate Supply and the Phillips Curve
Topic overviewAggregate supply and the AD/AS frameworkThe short run aggregate supply curveShifts in short run aggregate supplyThe Neo-Classical long run aggregate supply curveThe Keynesian long run aggregate supply curveShifts in long run aggregate supplyMacroeconomic equilibrium and adjustment to the long runThe short run Phillips curveExpectations, the long run Phillips curve and the NAIRUShifts in the long run Phillips curve
Economic Growth
Topic overviewMacroeconomic policy objectives and the conflicts between themMeasuring economic growthActual growth and potential growthIllustrating growth on the PPF and in AD/AS analysisOutput gapsThe business cycle and recessionThe causes of economic growthPolicy instruments used to create growthThe benefits and costs of economic growth
Unemployment
Topic overviewThe labour force, economic activity and inactivityMeasuring unemploymentProblems in measuring unemployment accuratelyThe economic and social costs of unemploymentCyclical unemployment and demand side causesFrictional, structural and seasonal unemploymentReal wage unemployment and incentives to workThe natural rate of unemploymentDemand side solutions to unemploymentSupply side solutions to unemploymentChoosing between demand side and supply side approaches
Inflation and Deflation
Topic overviewInflation, deflation and disinflation definedPrice indices, the basket and weightingCalculating index numbers and the inflation rateThe main measures of inflation comparedDemand-pull inflationCost-push inflationThe quantity theory of money and inflation expectationsThe costs of inflationPolicies to control inflationDeflation and the deflationary spiral
The Balance of Payments
Topic overviewThe balance of payments accountsThe current account and its four componentsThe capital and financial accountsWhy the balance of payments sums to zeroCauses of current account imbalancesThe terms of trade and the current accountThe consequences of a deficit or a surplusPolicies to correct a current account deficit
Control of the National Debt
Topic overviewDeficits, surpluses and the national debtMeasurement of the deficit and the debtStructural and cyclical deficitsDiscretionary policy and automatic stabilisersThe cost of servicing debt and credit ratingsRefinancing, confidence and market disciplineCrowding out and the effect of debt on growthAusterity in a downturn and whether debt is always bad
Fiscal Policy
Topic overviewThe budget and the fiscal stanceGovernment spending and where it goesTaxation and the sources of government revenueDirect and indirect taxesFiscal policy, aggregate demand and AD/AS analysisThe Keynesian case for demand side fiscal policyCriticisms of demand side fiscal policyThe Laffer curve and tax ratesSupply side fiscal policy
Monetary Policy and Financial Stability
Topic overviewThe Bank of England and monetary stabilityThe inflation target and the Bank of England remitThe Monetary Policy Committee and how Bank Rate is setThe transmission mechanism of monetary policyInterest rates, aggregate demand and inflationInterest rates and the exchange rateEvaluating interest rates as a policy toolQuantitative easing and how it worksThe risks of quantitative easing and its unwindingDirect intervention in bank lendingThe financial sector and the real economyAsset bubbles and the financial crisis of 2007-08Systemic risk, moral hazard and the lender of last resortRegulating the financial systemUK economic turning points since 1990
Exchange Rates and Supply Side Policies
Topic overviewExchange rate determination in a free marketFactors that cause a currency to appreciate or depreciateThe exchange rate index and effects on households and firmsExchange rates, aggregate demand and the macroeconomic objectivesManaged floats, fixed rates and central bank interventionThe terms of trade and the Marshall-Lerner conditionSupply side policies and long-run aggregate supplyMarket-based and interventionist supply side policiesEvaluating supply side policies
International Trade and Protectionism
Topic overviewWhy countries tradeAbsolute and comparative advantageCalculating comparative advantageThe gains from trade and the terms of tradeLimits and criticisms of comparative advantageThe case for free tradeThe case against free tradeTariffs and their effectsQuotas, subsidies and other methods of protectionThe arguments for and against protectionism
Globalisation and the UK in the World Economy
Topic overviewWhat globalisation is and what drives itThe benefits of globalisationThe costs of globalisationThe United Kingdom in the world economyThe World Trade OrganisationEconomic problems of developed, developing and emerging economiesThe European Union and the single marketThe advantages and disadvantages of membershipEnlargement of the European UnionEconomic and monetary union and the euroOptimal currency areas and the European Central Bank
Economic Development
Topic overviewWhat economic development meansNational income as a measure of developmentPurchasing power parity and comparing countriesThe Human Development IndexOther indicators of developmentEconomic structure and developmentObstacles: health, education and populationObstacles: capital, infrastructure and institutionsObstacles: trade, resources and external conditionsSolutions: liberalisation and foreign investmentSolutions: aid and debt reliefSolutions: industrialisation strategies
International Trade and Protectionism
- 10 subtopics
- 30 things to know
- All three components
What International Trade and Protectionism covers
International Trade and Protectionism is examined in Trade and development — assessed across all three components. It covers why countries trade, absolute and comparative advantage, Calculating comparative advantage, the gains from trade and the terms of trade, limits and criticisms of comparative advantage, the case for free trade, the case against free trade, tariffs and their effects, quotas, subsidies and other methods of protection and the arguments for and against protectionism.
Where it is assessed
All three components
Trade and development, assessed across Components 1, 2 and 3.
Check the Eduqas specification ↗The 10 subtopics
Each one has its own page.
- Why countries tradeInternational trade, specialisation in an international context and difference between visible and invisible trade.Open →
- Absolute and comparative advantageAbsolute advantage, comparative advantage and opportunity cost in this context.Open →
- Calculating comparative advantageWorking opportunity costs out from output figures, identifying which country should specialise where, and finding the range of terms that leaves both better off.Open →
- The gains from trade and the terms of tradeTerms of trade, prebisch-Singer hypothesis and intra-industry trade.Open →
- Limits and criticisms of comparative advantageStructural adjustment cost of trade, danger of over-specialisation and dynamic comparative advantage.Open →
- The case for free tradeFree trade and argument from consumer sovereignty.Open →
- The case against free tradeArgument that free trade damages developing economies, strategic argument against free trade and argument about environmental standards.Open →
- Tariffs and their effectsDifference between a specific and an ad valorem tariff, what a tariff does on a supply and demand diagram and government revenue from a tariff, on the diagram.Open →
- Quotas, subsidies and other methods of protectionQuota rent, domestic subsidy as a method of protection and export subsidy.Open →
- The arguments for and against protectionismInfant industry argument, sunset industry argument and employment argument for protection.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Key term
Why has world trade grown faster than world output since 1945?
Numbers
What was the General Agreement on Tariffs and Trade?
Evaluation
What is absolute advantage?
Evaluation
Can a country with no absolute advantage still gain from trade?
Evaluation
What does the production possibility frontier show about comparative advantage?
Numbers
Country A can produce either 10 wheat or 5 cloth. Calculate its opportunity cost of one unit of cloth
Numbers
Country B can produce either 4 wheat or 4 cloth. Calculate its opportunity cost of one unit of cloth
Numbers
Country A can produce either 10 wheat or 5 cloth, and Country B either 4 wheat or 4 cloth. Calculate each country's opportunity cost of one unit of wheat
Key term
Name three causes of a change in the terms of trade.
Key term
What is the Prebisch-Singer hypothesis?
Key term
Why might the terms of trade of primary producers decline over time?
Evaluation
What assumptions does the theory of comparative advantage make?
Key term
Why do transport costs weaken the conclusion of comparative advantage theory?
Key term
How do economies of scale complicate comparative advantage theory?
Key term
How does free trade lower prices for consumers?
Key term
How does free trade allow economies of scale?
Key term
How does free trade raise efficiency?
Key term
How does free trade cause structural unemployment?
Evaluation
What is the argument that free trade damages developing economies?
Key term
How does free trade affect inequality within a country?
Key term
Describe what a tariff does on a supply and demand diagram.
Key term
Who gains from a tariff?
Key term
Who loses from a tariff?
Key term
How does a quota differ from a tariff in its effect on government revenue?
Key term
How does a production subsidy compare with a tariff for consumers?
Key term
How can exchange rate manipulation act as protection?
Evaluation
What is the infant industry argument?
Evaluation
What is the objection to the employment argument for protection?
Evaluation
What is the current account argument for protection?
Take International Trade and Protectionism further
The same content, four other ways.
Questions from this topic
Each one with the model answer underneath.
- 1
What is international trade?
Model answer
International trade is the exchange of goods and services across national borders. Exports are sold abroad and imports are bought from abroad.
- 2
Why can no country produce everything it consumes?
Model answer
Resources are distributed unevenly between countries. Climate, mineral endowments, capital stock and skills all differ. No country holds every input it needs at a competitive cost.
- 3
What is specialisation in an international context?
Model answer
International specialisation is a country concentrating production on the goods it makes relatively efficiently. Trade then supplies everything the country has chosen not to produce.
- 4
How does specialisation raise world output?
Model answer
Each country moves resources into the goods it produces at lowest opportunity cost. Total world output rises even though total resources are unchanged. The extra output is the gain from trade.
- 5
What is the difference between visible and invisible trade?
Model answer
Visible trade is trade in physical goods. Invisible trade is trade in services such as insurance, tourism, shipping and financial services.
- 6
What is the balance of trade?
Model answer
The balance of trade is the value of exports less the value of imports. A positive figure is a surplus and a negative figure a deficit.
What is inside Levo
Six ways to work the same material.
International Trade and Protectionism revision questions
- What does International Trade and Protectionism cover in Eduqas A-Level Economics?
- 10 subtopics: why countries trade, absolute and comparative advantage, calculating comparative advantage, the gains from trade and the terms of trade, limits and criticisms of comparative advantage, the case for free trade, the case against free trade, tariffs and their effects, quotas, subsidies and other methods of protection and the arguments for and against protectionism. Each one has its own page with questions and model answers.
- How is International Trade and Protectionism organised?
- By the Eduqas A520QS specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in International Trade and Protectionism, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
Or £46 a year, about £3.83 a month. Cancel anytime.