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CAIE A-Level Economics AS 6.2 Protectionism Questions

Practise explaining protectionism, comparing policy tools and evaluating their effects on imports, prices, producers and consumers.

Syllabus
2026–2028
Course
Economics 9708
Level
AS

Exam points

  • interpret tariff or quota diagrams to find changes in imports and welfare areas
  • compare tariffs, quotas, subsidies and embargoes by their market effects
  • evaluate protectionist arguments using efficiency, jobs, consumers and retaliation

Covered syllabus points

6.2.1—Protectionism6.2.2—Protectionist tools6.2.3—Arguments for/against protectionism

Question 1

[Maximum number: 1]

In which economic context is the term 'protectionism' usually applied?

A

the protection of consumers against excessive prices

B

the protection of employees against exploitation by multinational companies

C

the protection of local producers against foreign competitors

D

the protection of the foreign exchange rate against currency speculators

Question 2

[Maximum number: 20]

Question (a)

(a)

Explain what is meant by protectionism and consider the effectiveness of using tariffs as a method of protectionism.

[ 8 ]

Question (b)

(b)

Assess whether free trade is always better than a policy of protectionism for a developing economy that wishes to trade internationally.

[ 12 ]

Question 3

[Maximum number: 14]

Raw sugar trade deal

Mexico and the United States reach deal and avoid trade war

Mexico, the US and Canada are the three members of the North American Free Trade Agreement, which has given Mexico's sugar producers free access to the US market since 2008. In March 2014, however, the association that represents the US sugar industry accused Mexican sugar producers of dumping cheap, subsidised sugar into the heavily protected US market and costing US sugar producers nearly US$1 billion in income in 2013-14.

The US government threatened to impose duties on imports of sugar from Mexico, and Mexico was proposing to impose retaliatory duties on some US products imported into Mexico. A deal has now been reached to avoid these protectionist measures and thus prevent a possible trade war.

The deal would set a minimum price for sugar to guard against undercutting or keeping US prices artificially low, and limit the amount of sugar that may enter the US market. Mexico could export 1.4 million tonnes of sugar to the US in 2014. That compares with an estimated 1.9 million tonnes for the 2013 crop year. Companies such as chocolate producers and soft drink manufacturers may also be relieved they will not have to pay higher prices for Mexican sugar now that the large duties have been avoided. The US is a net importer of sugar and Mexico is one of its largest suppliers.

Under the agreement Mexican producers agreed to sell at a minimum price of US$0.21 per pound weight (about US$0.46 per kilo) for raw sugar, much lower than would have applied if the import duties had been imposed on the sugar.

Table 1: Price of raw sugar 2011-2013

Table 1: Price of raw sugar 2011-2013

Question (a)

(a)

Explain one possible reason for the difference in the price of sugar in the US and the world price of sugar shown in Table 1.

[ 2 ]

Question (b)

(b)

What is meant by 'dumping'?

[ 2 ]

Question (c)

(c)

Explain why Mexican producers might choose to dump their sugar in the US market.

[ 2 ]

Question (d)

(d)

Consider how an economist would decide whether the accusation that Mexican producers were dumping sugar in the US was justified.

[ 2 ]

Question (e)

(e)

Consider who, if anybody, in the US and Mexico might benefit from a trade war despite the advantages of free trade.

[ 6 ]

Question 4

[Maximum number: 8]

Explain what is meant by protectionism and consider the effectiveness of using tariffs as a method of protectionism.

Question 5

[Maximum number: 12]

Assess whether free trade is always better than a policy of protectionism for a developing economy that wishes to trade internationally.

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