How does free trade affect the variety of goods and services available to consumers?

Free trade increases consumer choice by providing access to a wider variety of goods and services from different countries that may not be produced domestically.

Why do consumers typically face lower prices under free trade?

Free trade leads to lower prices due to increased competition from foreign producers and access to cheaper imports from countries with lower production costs.

Explain how free trade enables firms to achieve economies of scale.

Free trade gives firms access to larger international markets, allowing them to increase production volumes and spread fixed costs over more units, thereby reducing average costs of production.

What is the relationship between market size and average costs under free trade?

Larger international markets allow firms to produce at higher volumes, enabling them to exploit economies of scale and reduce average costs of production.

WJEC A-Level Economics 1520QS

Scarcity and Choice

Topic overview Scarcity, choice and opportunity cost Production possibility frontiers (PPFs): Production possibility frontier diagrams to depict choice Production possibility frontiers (PPFs): Factors which may shift the PPF inwards or outwards Specialisation, division of labour and exchange: Advantages and disadvantages of specialisation Specialisation, division of labour and exchange: Productivity

Demand and Supply in Product Markets

Topic overview Factors influencing demand and supply in product markets: Product market Factors influencing demand and supply: Main influences on demand and supply in product markets The determination of equilibrium price: Equilibrium price and output, and disequilibrium The determination of equilibrium price: How the market adjusts to a new equilibrium The determination of equilibrium price: Consumer and producer surplus on the diagram Consumer and producer surplus Price, income and cross price elasticities: Price elasticity of demand Price, income and cross price elasticities: Income and cross price elasticity of demand Price, income and cross price elasticities: Price elasticity of supply, uses of elasticity and tax incidence

Demand and Supply in Labour Markets

Topic overview Wage determination: Demand for labour as a derived demand Wage determination: Equilibrium wage rate and shifts in labour demand and supply Wage determination: Elasticity of demand for labour and Elasticity of supply of labour Wage determination: Causes of wage differentials, Effects of wage differentials, and wages in Wales Labour market issues: Factors which affect flexibility in labour markets Labour market issues: Effects of the statutory national minimum wage on labour markets Labour market issues: Impact of migration on labour markets

Resource Allocation

Topic overview How resources are allocated in a free market economy: Role of profit How resources are allocated in a free market economy: Derived demand and the assumptions of a free market

Market Failure

Topic overview Understanding market failure: Market failure Understanding market failure: Public goods, Merit and demerit goods Understanding market failure: Externalities Understanding market failure: Externalities of consumption and monopoly power Understanding market failure: Information asymmetries and gaps, Income inequality Understanding market failure: Volatile prices and externality diagrams Why and how governments intervene in markets: Reasons for government intervention in markets Why and how governments intervene in markets: Maximum prices, road pricing, pollution permits and other interventions Why and how governments intervene in markets: Evaluating government intervention The effects of government intervention: Government intervention can create distortions in markets The effects of government intervention: Reasons for government failure

Macroeconomic Theory (AS)

Topic overview The circular flow of income model: Flows in the circular flow model The circular flow of income model: Injections into and withdrawals from the circular flow The circular flow of income model: Model to explain the concept of national income equilibrium The units of aggregate demand (AD): Units of aggregate demand: consumption The units of aggregate demand (AD): Factors affecting consumption and investment, and the AD curve The AD function: Why an AD function will slope downward from left to right The AD function: Changes in the units The aggregate supply (AS) function: Shape of the Keynesian long run aggregate supply curve The aggregate supply (AS) function: Factors which might result in a shift in LRAS AD/AS analysis

Government Policy Objectives

Topic overview Economic growth: Actual and potential growth, output gaps and the business cycle Economic growth: Benefits of economic growth for households, government and firms Economic growth: Illustrating growth on PPF and AD/AS diagrams Unemployment (AS): Measurement and types Unemployment (AS): Costs Unemployment (AS): Causes

Policy Instruments (AS)

Topic overview Fiscal policy: Framework Fiscal policy: Direct and indirect taxes and demand side fiscal policy Fiscal policy: Automatic stabilisers, time lags and the Laffer curve Monetary policy: Bank of England and the Monetary Policy Committee, Inflation target Monetary policy: Bank Rate and the transmission mechanism Exchange rates and exchange rate policy: Exchange rates in a free market Exchange rates and exchange rate policy: Exchange rate policy Supply side policies: Aims of supply side policies Supply side policies: Market-based supply side policies and Limitations of supply side policies

International Trade (AS)

Topic overview Free trade and protectionism: Benefits and costs of free trade Free trade and protectionism: Main forms of protection; tariffs, quotas and other barriers Free trade and protectionism: Benefits and costs of protectionism

Costs, Revenues and Profits

Topic overview Costs, revenues and profits: Law of diminishing returns Costs, revenues and profits: Product, total and average costs Costs, revenues and profits: Total, average and marginal values for revenue and costs Costs, revenues and profits: Internal and external economies and diseconomies of scale Costs, revenues and profits: Concept of profit maximisation The growth of firms: How and why firms might grow The growth of firms: Types of integration/ mergers Efficiency

Market Structures

Topic overview Background to market structures Business objectives Perfect competition: Perfect competition and its underpinning assumptions Perfect competition: Efficiency of perfectly competitive markets Monopolistic competition Monopoly: Monopoly and its underpinning assumptions Monopoly: Comparing monopoly with perfect competition Monopoly: Potential costs and benefits of monopoly Oligopoly: Main features of oligopolistic markets and the concept of interdependence Oligopoly: Potential costs and benefits of oligopoly Competition policy: Why governments are concerned about monopoly power Competition policy: Benefits and limits of competition Privatisation: Way in which privatisation may increase competition Privatisation: Effects of privatisation on competition

Macroeconomic Theory (A2)

Topic overview Short run aggregate supply (SRAS)Long run aggregate supply (LRAS): Neo-Classical view of the process Long run aggregate supply (LRAS): Keynesian economists disagree with this process of adjustment The short run Phillips curve The long run Phillips curve

Macroeconomic Objectives (A2)

Topic overview Economic growth: Actual vs potential economic growth and Causes of growth Economic growth: Benefits and costs of growth Unemployment (A2): Measurement and types Unemployment (A2): Costs, measurement and the Phillips curve Unemployment (A2): Causes Inflation and deflation: Measurement and calculation Inflation and deflation: Causes Inflation and deflation: Costs Inflation and deflation: Deflation The balance of payments: Current account imbalances: causes The balance of payments: Current account imbalances: impacts The balance of payments: Solutions to current account deficits

Policy Instruments (A2)

Topic overview Control of the national (public sector) debt: Causes Control of the national (public sector) debt: Implications The operation of monetary policy: Interest rates and how quantitative easing works The operation of monetary policy: Effects and criticisms of quantitative easing The operation of monetary policy: Quantitative tightening, Funding for Lending and the financial sector Monetary stability: Asset bubbles and financial crises Financial stability

International Trade (A2)

Topic overview Advantages and disadvantages of free trade: Advantages of free trade Advantages and disadvantages of free trade: Disadvantages of free trade Protectionism: Free trade compared with protectionist measures Protectionism: Key methods of protectionism Globalisation: What globalisation is and what drives it, Benefits of globalisation Globalisation: Costs of globalisation and Evaluating the net impact of globalisation Trade and the UK: Absolute and comparative advantage, Terms of trade and the gains from trade Trade and the UK: Disadvantages of international trade Trade and the UK: Methods of protection Trade and the UK: Arguments for and against protectionism Trade and the UK: World Trade Organisation and globalisation Trade and the UK: UK’s major export sectors and an integrated world economy

Non-UK Economies

Topic overview European Union: Advantages and disadvantages of membership of the EU European Union: Whether the continuous expansion of the EU is beneficial European Union: EMU as an optimal currency area, and challenges facing MEDCs and emerging economies

Economic Development

Topic overview Measurement: What is meant by economic development and how it is measured Measurement: Human development index, More indirect indicators such as access to health and education Obstacles: Why LEDCs may face difficulties in competing with MEDCs Obstacles: Relevant obstacles Solutions: Liberalisation as a route to development, Aid and debt relief Solutions: Foreign direct investment and trade strategies

International Trade (A2)

12 subtopics
36 things to know
A2 Units 3 and 4

What International Trade (A2) covers

International Trade (A2) is A2 content, examined in both A2 Unit 3 and A2 Unit 4, which each cover all A level content. 159 recall questions across 12 subtopics.

Where it is assessed

A2 Units 3 and 4

Exploring Economic Behaviour and Evaluating Economic Models and Policies, both covering all A level content.

Check the WJEC specification ↗

The 12 subtopics

Each one has its own page.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Evaluation

What are the benefits of globalisation?

Evaluation

What are the costs of globalisation?

Key term

How does free trade enable countries to increase overall economic efficiency?

Evaluation

Why does specialisation according to comparative advantage under free trade benefit the global economy?

Key term

What type of unemployment is associated with the decline of uncompetitive industries due to free trade?

Key term

What is deindustrialisation and how can free trade cause it?

Key term

How does free trade benefit consumers in terms of the variety of goods available?

Key term

Explain how free trade leads to lower prices for consumers.

Key term

What happens to the quantity demanded domestically when a tariff is imposed?

Key term

How does a tariff affect domestic supply?

Key term

Define globalisation.

Process

What four main channels drive the process of globalisation?

Key term

How has globalisation affected income inequality?

Key term

Why might globalisation lead to environmental degradation?

Evaluation

What is meant by absolute advantage in international trade?

Evaluation

Define comparative advantage.

Key term

How can international trade raise living standards for households?

Key term

How does international trade benefit firms through access to larger markets?

Key term

What is a tariff?

Key term

What happens to the quantity demanded of imports when a tariff is imposed?

Key term

Why might a government use protectionism to protect infant industries?

Key term

What is dumping, and why might a government impose protectionist measures to prevent it?

Key term

What role do professional services play in UK exports?

Key term

How does an increasingly integrated world economy benefit the UK through services exports?

Key term

How does free trade encourage innovation and efficiency among domestic firms?

Key term

What vulnerabilities can arise from over-dependence on imports under free trade?

Key term

What type of unemployment can result from free trade in industries that cannot compete internationally?

Key term

Explain what happens to the volume of imports when a tariff is imposed.

Key term

How has globalisation affected patterns of world specialisation?

Key term

How can globalisation result in a loss of national sovereignty?

Evaluation

Can a country have comparative advantage in a good without having absolute advantage in that good?

Key term

How do cheaper imported inputs benefit firms engaged in international trade?

Key term

What happens to domestic production when a tariff is imposed on imports?

Key term

Why might a government protect strategic industries from foreign competition?

Key term

What are the main functions of the World Trade Organisation?

Key term

How does inward foreign direct investment benefit the UK in an integrated world economy?

Take International Trade (A2) further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

A tariff vs A quota
A tariff: a tax on an imported good, which raises its price in the domestic market. A quota: a direct limit on the quantity of a good that may be imported.
Free trade vs Protectionism
Free trade: exchange between countries without government barriers of any kind. Protectionism: deliberate government restriction of imports to shield domestic producers.

Questions from this topic

Each one with the model answer underneath.

1
How does free trade enable countries to increase overall economic efficiency?
Model answer
Free trade allows countries to specialise in producing goods and services where they have a comparative advantage, meaning resources are allocated to their most productive uses, increasing overall economic efficiency.
2
Why does specialisation according to comparative advantage under free trade benefit the global economy?
Model answer
When each country produces goods where it has the lowest opportunity cost, total world output increases with the same resources, raising global economic efficiency and welfare.
3
How does free trade affect the variety of goods and services available to consumers?
Model answer
Free trade increases consumer choice by providing access to a wider variety of goods and services from different countries that may not be produced domestically.
4
Why do consumers typically face lower prices under free trade?
Model answer
Free trade leads to lower prices due to increased competition from foreign producers and access to cheaper imports from countries with lower production costs.
5
Explain how free trade enables firms to achieve economies of scale.
Model answer
Free trade gives firms access to larger international markets, allowing them to increase production volumes and spread fixed costs over more units, thereby reducing average costs of production.
6
What is the relationship between market size and average costs under free trade?
Model answer
Larger international markets allow firms to produce at higher volumes, enabling them to exploit economies of scale and reduce average costs of production.

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Scarcity and Choice

Demand and Supply in Product Markets

Demand and Supply in Labour Markets

Resource Allocation

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AThe demand curve shifts to the left.

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Actual growth means a realised increase in output.

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International Trade (A2) revision questions

What does International Trade (A2) cover in WJEC A-Level Economics?: 12 subtopics: advantages and disadvantages of free trade: advantages of free trade, advantages and disadvantages of free trade: disadvantages of free trade, protectionism: free trade compared with protectionist measures, protectionism: key methods of protectionism, globalisation: what globalisation is and what drives it, benefits of globalisation, globalisation: costs of globalisation and evaluating the net impact of globalisation, trade and the uk: absolute and comparative advantage, terms of trade and the gains from trade, trade and the uk: disadvantages of international trade, trade and the uk: methods of protection, trade and the uk: arguments for and against protectionism, trade and the uk: world trade organisation and globalisation and trade and the uk: uk’s major export sectors and an integrated world economy. Each one has its own page with questions and model answers.
How is International Trade (A2) organised?: By the WJEC 1520QS specification, subtopic by subtopic, so it matches the order you are taught it in.

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