Cambridge O Level Economics: Methods, reasons and consequences of protection (2281) – 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 (methods, reasons and consequences of protection) of the Cambridge O Level Economics (2281) syllabus for examination in 2026, version 2. There are no tiers. Every country, firm, market and figure is invented and illustrative. Revise first with the study guide and the revision notes. Other links: the Cambridge O Level Economics hub, the printable checklist and the free diagnostics. Write out your own answer before you read the worked answer.

Questions

1. Define an embargo and give one example of a good a government might embargo. [2]

2. Country D imports wooden toys at a world price of 40 each. It then adds an ad valorem tariff of 30%. Imports fall from 800 to 620 a month.

(a) Calculate the price of a toy in Country D after the tariff. [1] (b) Work out the government’s monthly income from the tariff. [2] (c) Find the percentage fall in imports. [1] (d) Calculate the price elasticity of demand for imports over this range. [2]

3. Country E imported 120,000 tonnes of cement a year at a world price of 90 a tonne. It sets a quota of 90,000 tonnes. The home price rises to 99 a tonne.

(a) Calculate the percentage by which the quota cuts imports. [1] (b) Explain why the home price rises. [3] (c) Calculate the extra income earned by foreign sellers on the 90,000 tonnes, and state who would receive it if the government sold the import licences. [2]

4. Country F pays a subsidy of 9 per unit to its jacket makers, who produce 450 units a month.

(a) Calculate the monthly cost to the government. [2] (b) Explain one advantage of a subsidy over a tariff for consumers. [2] (c) Explain one disadvantage of a subsidy compared with a tariff. [2]

5. A start-up in Country G makes electric fans. The world price is 55 a fan. Its costs are shown below.

Output per month	Total cost
50	6,500
100	9,000
150	10,950
200	12,400
250	13,750

(a) Work out the average cost at each output and state the first output at which the firm can match the world price. [3] (b) Explain why this is an example of an infant industry argument. [2] (c) Explain why the protection should be temporary. [2]

6. Explain why a government might protect a strategic industry. [4]

7. A foreign firm sells steel pipes in Country H at 66 a unit. The same pipes sell in its home market for 88.

(a) Define dumping. [2] (b) Calculate by what percentage the price in Country H is below the home price of the foreign firm. [2] (c) Calculate the specific tariff that would raise the price to the home price. [1] (d) Explain why dumping harms domestic producers even though consumers gain. [4]

8. Country J imports heaters at a world price of 30. It then adds a tariff of 6 a heater. Before the tariff, quantity demanded was 1,200 and home output was 300. After the tariff, quantity demanded is 1,100 and home output is 360.

(a) Work out the number of heaters imported before the tariff and after it. [2] (b) Work out the money the government collects from the tariff. [2] (c) Find the percentage change in home output. [2] (d) Explain two groups in Country J that are worse off and one that is better off. [4]

9. Country K exported 25,000 tonnes of tea a year to Country L at 2,400 a tonne. Country L introduces a tariff and exports fall to 17,500 tonnes. The price received by Country K stays at 2,400.

(a) Calculate the fall in Country K’s export revenue. [2] (b) Calculate this as a percentage of the original revenue. [1] (c) Explain how the fall could affect workers and the government in Country K. [3] (d) Explain how retaliation by Country K could affect exporters in Country L. [3]

10. Country M puts a tariff of 6 on a drug whose import price is 30. Imports fall from 7,000 to 6,650 units.

(a) Calculate the price elasticity of demand for imports. [2] (b) Calculate the tariff revenue. [2] (c) Explain whether the tariff is effective in protecting home producers. [4]

11. Country N makes 6,000 motorbikes and imports 18,000 a year at 900 each. It adds a 20% ad valorem tariff. Afterwards it imports 13,500 bikes and home firms make 8,400, all sold at 1,080.

(a) Calculate the tariff revenue. [2] (b) Calculate the percentage change in home output. [2] (c) Evaluate whether the tariff is a good policy for Country N. [6]

Answers

1. An embargo is a ban on trade with a country or in a particular good [1]. Example: a ban on arms exports (or imports) [1]. [2] Examiner insight: A good definition includes the idea of a ban. “Restriction” alone also describes a quota, so it is too vague to separate the two.

2. (a) Tariff = 0.30 x 40 = 12, so price = 52 [1]. (b) Revenue = 12 x 620 [1] = 7,440 [1]. (c) (800 - 620) / 800 x 100 = 22.5% [1]. (d) Price change is +30% [1]. Elasticity = -22.5 / 30 = -0.75, inelastic [1]. Examiner insight: Show that the tariff is charged on the 620 units still imported, not the 800, or the revenue figure is wrong.

3. (a) (120,000 - 90,000) / 120,000 x 100 = 25% [1]. (b) The quota cuts supply to the market [1]. Demand is unchanged, so there is a shortage at the old price [1]. Buyers bid the price up until demand matches the lower supply [1]. (c) (99 - 90) x 90,000 = 810,000 [1]. The government would receive it [1]. Examiner insight: Link the price rise to a shortage or reduced supply. Repeating that “the quota raises the price” is a restatement, not an explanation.

4. (a) 9 x 450 [1] = 4,050 [1]. (b) A subsidy lets home firms make more without raising the price to buyers [1], so consumers keep paying the world price [1]. (c) A subsidy costs the government money and must be funded by taxes [1], whereas a tariff raises revenue [1]. Examiner insight: Compare the two methods directly. An answer that says only what a subsidy does does not meet “compared with”.

5. (a) Average costs: 130, 90, 73, 62, 55 [1] (all five worked out [1]). First output at or below 55: 250 [1]. (b) The firm is new and small [1], and its cost per unit is high until output grows [1]. (c) Once it reaches 250 units it can match the world price [1]. Staying protected would let buyers keep paying more and remove the pressure to keep costs low [1]. Examiner insight: Quote the figures from the table. A statement that costs “fall” gains less than naming the 250 units and the price of 55.

6. Strategic industries supply goods the country needs in a crisis, such as food or energy [1]. If the country relied on imports, supply could be cut by war or a dispute [1]. Protection keeps a home industry alive [1], so the country can still supply itself, at the cost of higher prices to consumers [1]. [4] Examiner insight: Give a reason and a consequence. Naming “food” or “defence” without the security reason is a list, not an explanation.

7. (a) Dumping means selling abroad [1] for less than it costs to make or for less than it charges at home [1]. (b) (88 - 66) / 88 x 100 [1] = 25% [1]. (c) 88 - 66 = 22 [1]. (d) Domestic firms cannot match the low price [1], so they lose sales [1] and may close [1]. The foreign firm may then raise prices when it faces less competition [1]. Examiner insight: The percentage is calculated on the home price (88), as the question says. Dividing by 66 gives a different figure.

8. (a) Before: 1,200 - 300 = 900 [1]. After: 1,100 - 360 = 740 [1]. (b) 6 x 740 [1] = 4,440 [1]. (c) (360 - 300) / 300 x 100 [1] = 20% [1]. (d) Consumers pay 36 instead of 30 and buy fewer heaters [1], and firms that use heaters as an input face dearer costs [1]. Home heater producers sell more and earn more [1], which can protect jobs [1]. Credit a government gain instead of the producers’ gain. Examiner insight: Name the groups and say what happens to each. Writing “the economy” gives no group to credit.

9. (a) Before: 25,000 x 2,400 = 60,000,000 [1]. After: 17,500 x 2,400 = 42,000,000. Fall = 18,000,000 [1]. (b) 18,000,000 / 60,000,000 x 100 = 30% [1]. (c) Tea firms sell less, so they may cut output and lay off workers [1]. Fewer wages and profits mean lower income and tax receipts [1], and less foreign currency comes in [1]. (d) Country K taxes imports from Country L [1], so Country L goods cost more in K and sell less [1], which cuts income and jobs among its exporters [1]. Examiner insight: Show both the before and after revenue in (a). The difference is what the question asks for.

10. (a) Imports change = -350 / 7,000 = -5% [1]. Price change = +20%. Elasticity = -5 / 20 = -0.25 [1]. (b) 6 x 6,650 [1] = 39,900 [1]. (c) Demand is very inelastic (-0.25), so imports fall by only 5% [1]. Home producers gain little extra market [1], so the tariff protects them poorly [1]. It does raise revenue of 39,900 [1]. Examiner insight: Use the elasticity figure to reach a judgement on effectiveness. Saying “it depends” with no number is weak.

11. (a) Tariff per bike = 0.20 x 900 = 180 [1]. Revenue = 180 x 13,500 = 2,430,000 [1]. (b) (8,400 - 6,000) / 6,000 x 100 [1] = 40% [1]. (c) For: home output rises 40%, so firms and workers gain, and the government earns 2,430,000 [1]. Imports fall from 18,000 to 13,500, which is 25% [1]. Against: the price rises from 900 to 1,080, a 20% rise, so buyers pay more [1], and total sales fall from 24,000 to 21,900, down 8.75% [1]. Partners lose sales and may retaliate [1]. Judgement: the policy is worth it only if the home industry can become competitive and the tariff is temporary, since otherwise buyers keep paying more [1]. Examiner insight: A mark-earning evaluation uses figures from the question for both sides and finishes with a judgement tied to a stated condition.

Where marks are usually lost

• Defining an embargo as any restriction, not a ban.
• Applying a tariff to the imports before the tariff, not after.
• Writing that a quota always gives the government revenue.
• Taking the new figure rather than the old one as the base for a percentage.
• Describing a reason for protection without saying why it matters.
• Writing about consumers only when the question asks about trading partners.
• Ignoring the data and giving a general answer to an evaluation.
• Leaving out a judgement at the end.

Next steps

• Return to the revision notes and the study guide.
• Check your coverage on the printable checklist and the Cambridge O Level Economics hub.
• Try all the free 10-minute diagnostics to find weak spots.
• Book a free trial class.

Official syllabus

Cambridge O Level Economics (2281) syllabus for examination in 2026, version 2, published by Cambridge University Press & Assessment: sections 6.2.4 Methods of protection, 6.2.5 Reasons for protection and 6.2.6 Consequences of protection.