Cambridge IGCSE Economics: Trade protection: methods, reasons and consequences (0455) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 6.2.4 to 6.2.6 of the Cambridge IGCSE Economics (0455) syllabus for examination in 2026: methods, reasons and consequences of protection. The syllabus is not tiered. All countries, firms and figures are invented, and money is in dollars. The syllabus says calculators may be used in both papers, so use one for the arithmetic, but show your working.

Revise first with the study guide and the revision notes. Other links: the course hub, the printable checklist and the free 10-minute diagnostics.

Questions

1. Define an import quota. [2]

2. Country G imports rolls of fabric at a world price of 20. The government adds a 15% tariff. Imports fall from 60 000 rolls to 48 000 rolls.

(a) Calculate the price of a roll after the tariff. [1] (b) Calculate the revenue the government collects. [2] (c) Calculate the percentage fall in imports. [1]

3. Distinguish between an embargo and an import quota. [3]

4. Explain why a government might protect an infant industry, and state one drawback of doing so. [4]

5. A firm in Country J has a cost of 90 per unit and sells in its home market at 110. It exports 20 000 units to Country K at 75 each.

(a) Calculate the total loss the firm makes on these exports. [2] (b) Explain why this could harm producers in Country K. [2] (c) State one method Country K could use to avoid this problem. [1]

6. The world price of rice is 50 per tonne. At 50, Country L demands 90 000 tonnes and its farmers supply 20 000. At 60, it demands 84 000 tonnes and its farmers supply 29 000.

(a) A 20% tariff is applied. Calculate imports and the tariff revenue. [3] (b) Instead, the government pays a subsidy of 10 per tonne and consumers still pay 50. Home output is 29 000 tonnes. Calculate the cost of the subsidy. [2] (c) State one reason consumers might prefer the subsidy. [1]

7. Country M’s shoe industry is declining. A quota raises the price of shoes from 30 to 36 a pair. Consumers buy 500 000 pairs. The government says the quota protects 1 000 jobs.

(a) Calculate the extra spending by consumers. [2] (b) Calculate the cost per job protected. [1] (c) Explain one argument for and one against the quota. [3]

8. Country N uses 4.0 million tonnes of grain a year and imports 3.0 million tonnes.

(a) Calculate the percentage of grain that is imported. [1] (b) Explain why the government might treat grain as a strategic industry. [3]

9. A tariff raises the price of a good by 30%. Quantity demanded falls by 15%.

(a) Calculate the price elasticity of demand. [1] (b) State whether demand is elastic or inelastic. [1] (c) Explain how this affects how well the tariff cuts total consumption of the good. [2]

10. Country P exports goods worth 48 million to Country R. Country R puts a tariff on them, and Country P’s exports fall by 35%.

(a) Calculate the fall in exports and the new value of exports. [2] (b) Explain one effect of this fall on Country P’s economy. [2] (c) Country P retaliates with its own tariffs. Explain one effect on Country R. [2]

11. Country S wants to build a tablet industry. The world price is 100. A home firm has a unit cost of 125 now. The government considers a 30% tariff for five years. The firm expects its unit cost to fall to 85 as output grows.

(a) Calculate the price of an imported tablet after the tariff and the firm’s margin per unit. [2] (b) Evaluate whether a tariff is a sound way to protect this industry. [6]

Answers

1. A limit, set by the government, on the quantity (or value) of a good [1] that may be imported in a period [1]. [2] Examiner insight: A definition gains credit for stating that it is a limit on quantity or value. Writing only “a restriction on imports” does not separate a quota from a tariff or ban.

2. (a) 20 × 1.15 = 23 [1] (b) Tariff per roll = 23 − 20 = 3 [1]. Revenue = 48 000 × 3 = 144 000 [1] (c) (60 000 − 48 000) / 60 000 × 100 = 20% [1] [4] Examiner insight: Tariff revenue uses the imports that remain after the tariff, not the original 60 000. Showing the tariff per unit first makes the method clear even if you slip later.

3. An embargo is a ban on trade in a good or with a country [1]. A quota allows imports up to a set limit [1]. So under an embargo no foreign supply reaches consumers, while under a quota some does [1]. [3] Examiner insight: A distinction needs both sides compared. Saying what an embargo is, then what a quota is, then linking them, is safer than defining only one.

4. A new industry has small output [1], so its unit costs are high and it cannot match established foreign firms [1]. A tariff or other protection raises the price of imports, giving the firm time to grow and cut costs [1]. Drawback: it may never become efficient, and consumers pay higher prices meanwhile [1]. [4] Examiner insight: A reason and its explanation need a link: small output, high cost, cannot compete, protection. A bare statement that “it helps new firms” is only the start of a chain.

5. (a) Loss per unit = 90 − 75 = 15 [1]. Total = 15 × 20 000 = 300 000 [1] (b) The imports are priced below what home firms need to cover costs [1], so they lose sales and may close, with jobs lost, after which the exporter could raise its prices [1]. (c) An anti-dumping tariff (or a quota or embargo on the product) [1] [5] Examiner insight: Dumping is defined by price versus cost or the home price. Show both the export price and the benchmark you compare it with.

6. (a) Imports = 84 000 − 29 000 = 55 000 tonnes [1]. Tariff per tonne = 20% of 50 = 10 [1]. Revenue = 55 000 × 10 = 550 000 [1] (b) Home output is 29 000 tonnes [1], so cost = 29 000 × 10 = 290 000 [1] (c) The price stays at 50 rather than rising to 60 [1] [6] Examiner insight: Subsidy cost is based on home output, tariff revenue on imports. Using the wrong quantity is a common slip, so label each figure.

7. (a) Price rise = 36 − 30 = 6 [1]. 6 × 500 000 = 3 000 000 [1] (b) 3 000 000 / 1 000 = 3 000 per job [1] (c) For: it slows job losses and gives workers time to retrain [1]. Against: consumers pay more, and the cost per job may exceed the wage of the job saved [1]. Development or judgement of one side, such as whether 3 000 per job is worth paying [1]. [6] Examiner insight: An argument for and an argument against needs both sides, and the best answers use the 3 000 figure rather than a general statement.

8. (a) 3.0 / 4.0 × 100 = 75% [1] (b) Food is essential to survival [1]. With 75% imported, supply could be cut by conflict, bans or price shocks [1]. Protecting home farming keeps capacity at home and reduces dependence, though at higher cost [1]. [4] Examiner insight: Link your answer to the figure in the question. Saying “75% is imported, so the country is exposed” is stronger than a general remark about food.

9. (a) −15 / 30 = −0.5 [1] (b) Inelastic, because the percentage fall in quantity is smaller than the percentage rise in price [1] (c) Consumers cut back by less than the price rise [1], so the tariff does little to reduce total consumption, and consumers bear much of the cost [1] [4] Examiner insight: A sign or a size of elasticity on its own is a start. Explaining what it means for the policy turns a calculation into analysis.

10. (a) 48 × 0.35 = 16.8 million fall [1]. New exports = 48 − 16.8 = 31.2 million [1] (b) Lower export revenue means lower income for exporting firms [1], so jobs may be lost and growth may slow [1]. (c) Country R’s exporters face higher prices abroad [1], so their sales and jobs fall, and the tariff has hurt R as well [1]. [6] Examiner insight: Questions that ask for the impact on a trading partner want the effect on that country, so name the affected group (exporters, workers) and say what happens to them.

11. (a) Price = 100 × 1.3 = 130 [1]. Margin = 130 − 125 = 5 [1] (b) For: with the tariff the firm can sell at a small profit while it grows [1], and its unit cost is expected to fall to 85, below the world price, so the tariff could end [1]. Against: consumers pay 30 more per tablet [1], the margin is only 5, so a small cost rise would wipe it out [1], other countries might retaliate [1]. Judgement: a tariff with a fixed end date is reasonable if the cost forecast is credible, but it depends on whether the firm really improves [1]. [8] Examiner insight: An evaluation scores best when it reaches a judgement with a condition attached. Listing points for and against without a conclusion leaves the question unanswered.

Where marks are usually lost

• Using the wrong quantity: tariff revenue needs imports after the tariff.
• Working out a percentage change against the new value instead of the original.
• Saying a quota produces government revenue without mentioning licences.
• Calling any cheap import “dumping”.
• Describing only the home country when asked for the impact on trading partners.
• Stating an elasticity value but not explaining what it means for the policy.
• Leaving out units or the word “per” in cost-per-job answers.
• Ending an evaluation without a judgement.

Next steps

• Recall the key points in the revision notes.
• Re-read the explanations in the study guide.
• Go to the course hub and the printable checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Cambridge IGCSE Economics 0455 syllabus for examination in 2026, version 2, published by Cambridge University Press & Assessment (Cambridge International Education). Content: section 6.2, subtopics 6.2.4 to 6.2.6.