Economics 9708 · AS & A Level · International trade and free trade
Two countries each produce two products and wish to trade with one another. Explain the distinction between absolute advantage and comparative advantage, and consider whether comparative advantage is always the more important influence when each country decides whether to trade with the other.
Assess whether protectionism is the best method for correcting a deficit in the current account of the balance of payments.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “AO1 Knowledge and Understanding (max 3 marks): Absolute advantage defined: one country can produce more of a certain product for a given set of resources (1). Comparative advantage defined: one country can produce a product at a lower opportunity cost than another (1). Basic explanation that one country may have absolute advantage in both products, yet the other may still have the lower opportunity cost in producing one product (1).” …