Pearson Edexcel International GCSE Economics: Free trade and protection diagrams (4EC1) – 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 section 2.2.2 a), b) and c) of the Pearson Edexcel International GCSE Economics (4EC1) specification, Issue 3, February 2026: free trade, reasons for protection, and tariff, quota and subsidy diagrams. There is one tier of entry. Every country, firm and figure here is made up.

Links: study guide, revision notes, Edexcel IGCSE Economics hub and checklist.

Questions

1. What is meant by dumping? [2]

2. A small bakery in Country C spends 40% of its total costs on imported flour. Free trade cuts the flour price by 15%. Other costs do not change.

(a) Calculate the percentage fall in the bakery’s total costs. [2] (b) State one other advantage of free trade for consumers. [1]

3. In Country C, demand for woollen blankets is Qd = 200 − 4P and home supply is Qs = 3P + 18 (thousand blankets a month, price in currency units). The world price is 20.

(a) Calculate imports under free trade. [1] (b) The government adds a 10% tariff. Calculate the tariff revenue. [3]

4. Draw a supply and demand diagram to show the effect of a tariff on an imported good. [4]

5. Using the data in question 3, the government replaces the tariff with a quota of 14 thousand blankets.

(a) Calculate the new price. [3] (b) Explain who receives the extra payment per blanket. [2]

6. Instead, the government pays home producers a subsidy of 3 per blanket (data from question 3).

(a) Calculate home output and the cost of the subsidy. [3] (b) Explain one advantage of the subsidy compared with the tariff in question 3. [2] (c) State one disadvantage of the subsidy. [1]

7. Country D spends 900 a month on imports and earns 840 from exports.

(a) Calculate the current account balance on goods. [1] (b) A tariff cuts imports by 10%. Calculate the new balance. [2] (c) Country D’s trading partner retaliates, and exports fall by 10%. Calculate the balance. [2] (d) Explain one reason why a tariff may not reduce a deficit. [3]

8. Country E has a new bicycle firm. The world price is 30. Its unit cost falls as output grows.

Output (thousand)	5	10	20	30	40
Unit cost	48	40	34	29	26

(a) A 25% tariff is introduced. Calculate the price of an imported bicycle. [2] (b) Find the lowest output in the table at which the firm can match the import price without the tariff, and with it. [2] (c) Explain one risk of protecting an infant industry. [3]

9. Country A bans imported toys that fail safety tests and puts a tariff on other imported toys. Explain one reason for each policy. [4]

10. Country G’s tariff on rice protects 30 jobs. Consumers pay 120 thousand a month more, and the government collects 45 thousand in revenue. A job pays 2.5 thousand a month.

(a) Calculate the extra cost to consumers for each job protected. [2] (b) Assess whether the tariff is worth keeping. [6]

11. Country H’s steel industry is struggling against cheap imports. Evaluate whether a tariff, a quota or a subsidy is the best way to help it. [8]

Answers

1. Selling goods in another country [1] at a price below the cost of production, or below the price charged at home [1]. [2] Examiner insight: Credit comes from covering the act of selling abroad and the low price together. Writing only “selling cheap goods abroad” gives no sense of the comparison.

2. (a) Fall in costs = 40% × 15% [1] = 6% [1] (b) Any one: greater choice; lower prices on other goods; access to goods not made at home [1]. [3] Examiner insight: Multiply the share by the price change. Writing 15% as the answer ignores that flour is only part of costs.

3. (a) Qd = 200 − 80 = 120; Qs = 60 + 18 = 78; imports = 42 [1] (b) Tariff = 10% × 20 = 2, so price = 22 [1]. Qd = 112 and Qs = 84, so imports = 28 [1]. Revenue = 2 × 28 = 56 thousand [1] [4] Examiner insight: Revenue uses imports after the tariff. Show the new price and the new imports as separate lines so each step of your working can be followed.

4. Axes are price and quantity, with D sloping down and S sloping up [1]. A horizontal line at the world price Pw [1]. A second horizontal line above it at Pw plus the tariff [1]. Imports shown as the gap between S and D at each price, smaller after the tariff [1]. [4] Examiner insight: Label each line and each quantity so a reader can see every feature. An unlabelled sketch hides whether you know what the shape shows.

5. (a) Imports = (200 − 4P) − (3P + 18) = 182 − 7P [1]. Set 182 − 7P = 14 [1]. So P = 24 [1] (b) The gap is 24 − 20 = 4 per blanket [1]. It goes to the import licence holders, giving 4 × 14 = 56, unless the government sells the licences [1]. [5] Examiner insight: Say who receives the gap. “The government” is a tempting wrong answer, because a quota does not tax anyone by itself.

6. (a) Firms receive 20 + 3 = 23 [1]. Qs = 69 + 18 = 87 [1]. Cost = 3 × 87 = 261 thousand [1] (b) Consumers still pay the world price of 20 [1], so the price does not rise as it does with a tariff [1]. (c) Taxpayers must fund it, or it has an opportunity cost [1]. [6] Examiner insight: A comparison needs both items. Say what happens to price under the subsidy and contrast it with the tariff, rather than describing the subsidy alone.

7. (a) 840 − 900 = −60 (a deficit) [1] (b) Imports = 900 × 0.9 = 810 [1]. Balance = 840 − 810 = +30 [1] (c) Exports = 840 × 0.9 = 756 [1]. Balance = 756 − 810 = −54 [1] (d) Demand for imports may be inelastic [1], so spending on imports falls little when the price rises [1], and the deficit persists [1]. [8] Examiner insight: Part (c) builds on part (b), so show the new import figure explicitly. A clear chain, from elasticity to spending to the balance, is stronger than naming a reason alone.

8. (a) Tariff = 25% × 30 = 7.5 [1]. Price = 37.5 [1] (b) Without tariff: output 30 (cost 29 is below 30) [1]. With tariff: output 20 (cost 34 is below 37.5) [1] (c) The firm may not become efficient [1], so the tariff stays [1], and consumers keep paying a higher price than the world price [1]. [7] Examiner insight: Read the table for the first cost below the price, not the lowest cost. State the price you are comparing against in each case.

9. Ban: buyers cannot judge safety themselves [1], so banning failing toys protects children’s health [1]. Tariff: raises the price of imports, which brings in revenue [1] that the government can spend on public services [1]. [4] Examiner insight: Match each reason to its policy. Giving two reasons for the ban, and none for the tariff, answers only half the question.

10. (a) Consumers’ extra cost per job = 120 ÷ 30 [1] = 4 thousand a month [1] (b) For: protects 30 jobs and incomes [1]; the government gains 45 thousand, so the net cost is 75 thousand, or 2.5 thousand per job [1]. Against: 4 thousand per job exceeds the 2.5 thousand wage [1]; higher prices fall on all consumers [1]; retaliation could cost export jobs [1]. Judgement: on cost alone the tariff looks weak, because the net cost equals a wage, unless the jobs are in a region with few alternatives or the protection is temporary [1]. [8] Examiner insight: Use the figures in the data. An assessment that weighs the 4 thousand and the 2.5 thousand against each other gains more than general statements about jobs.

11. Tariff: raises revenue [1], but raises prices for steel users [1]. Quota: limits imports firmly [1], but licence holders gain the gap [1]. Subsidy: lowers home costs without raising import prices [1], but taxpayers pay [1]. Judgement: depends on aim, such as revenue, price or a firm limit, and on whether the support is temporary and others retaliate [1]. A supported conclusion, such as a time-limited subsidy if steel is a key input, or a tariff if revenue is needed [1]. [8] Examiner insight: Your final judgement should come out of the points above it. Setting the three methods side by side on cost and effect reads better than describing each one in turn.

Where marks are usually lost

• Defining dumping as “cheap imports” with no comparison of price and cost.
• Calculating tariff revenue on the imports before the tariff.
• Saying a quota raises government revenue, without mentioning licences.
• Drawing diagrams without labelling the world price, tariff price or quantities.
• Listing reasons for protection without explaining the chain.
• Missing the unit, such as thousand blankets or currency units.
• Ignoring retaliation when judging a current account measure.
• Ending with a conclusion that restates the question without choosing.

Next steps

• Revisit the study guide for any question that cost you marks.
• Use the revision notes and try the self-test again.
• Tick off what you know on the printable checklist and visit the Edexcel IGCSE Economics hub.
• Take the free 10-minute diagnostics to find your weakest topics.
• Book a free trial class.

Official syllabus

Pearson Edexcel International GCSE in Economics (4EC1) specification, Issue 3, February 2026, for first teaching September 2017, published by Pearson Education Limited. Section 2.2.2 a), b) and c).