Learning objectives
Distinguish absolute from comparative advantage and work out from opportunity costs which good each country should specialise in
Explain the benefits of specialisation and free trade, using a trading possibility curve to show consumption beyond the production possibility curve
Explain the limitations of the theories of absolute and comparative advantage, such as transport costs, immobile factors and the two-country, two-good model
Analyse the effects of tariffs, import quotas, export subsidies, embargoes and administrative barriers on prices, quantities, government revenue and welfare
Evaluate the arguments for and against protectionism, including infant industries, dumping, strategic industries, jobs and retaliation
(A Level) Distinguish free trade areas from customs unions and other trading blocs, and explain trade creation and trade diversion
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