CAIE A-Level Economics AS 6.2 Protectionism Questions

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

Follow the point-based marking guidance at the top of this mark scheme and award:

up to 3 marks for AO1 Knowledge and understanding up to 3 marks for AO2 Analysis

up to 2 marks for AO3 Evaluation.

AO1 Knowledge and Understanding (max 3 marks)

Protectionism is when governments attempt to protect domestic businesses against foreign competition (1). It seeks to reduce the impact of the free market/ restrict free trade (1) by increasing the price competitiveness of domestic businesses against foreign competitors (1).

AO2 Analysis (max 3 marks)

- An explanation of how tariffs work (diagram will help although this is not essential) as a method of protectionism i.e., increasing prices of imports and increasing the price competitiveness of domestic businesses. NB: no marks for a diagram unless it is used to explain the impact on the price of imports and how it protects domestic businesses. Up to 2 marks e.g., for an explanation of how tariffs increase the price of imports (1) and how this protects domestic businesses as it increases their price competitiveness (1)

- Problems may include possible retaliation, inelastic PED for imports, possible cost push inflationary pressure. Up to 2 marks e.g., retaliation by other countries may offset the impact, if the demand for imports is price inelastic then imports may not fall and domestic businesses will not benefit, if the impact is on imported raw materials, this will lead to cost push inflation and domestic businesses who rely on such imports will not benefit.

- If only uses or problems of tariffs are discussed, maximum mark of 2.

AO3 Evaluation (max 2 marks)

- Evaluation should consider how effective tariffs may be considering both how they can protect domestic businesses and the associated problems with 1 mark reserved for a justified conclusion.

Please use a text box to show the mark split e.g., 2,2,1

AO1 Knowledge and understanding

AO2 Analysis

AO3 Evaluation

Use Table A: AO1 Knowledge and understanding and AO2 Analysis and Table B: AO3 Evaluation to mark candidate responses to this question.

AO1 and AO2 out of 8 marks. AO3 out of 4 marks.

Indicative content

Responses may include:

AO1 Knowledge and understanding and AO2 Analysis

- Analysis of the advantages and disadvantages of free trade and

- Analysis of the advantages and disadvantages of protectionism

- Both in the context of a developing economy.

Guidance:

The advantages of free trade may include:

- Efficient allocation of resources due to specialisation and comparative advantage.

- An opportunity to take advantage of different factor endowments.

- Competitive pressure to keep costs down / increase efficiency / lower prices for consumers.

- Higher output / economies of scale and increased choice and availability for consumers.

- Disadvantages may include:

- Over exploitation of scarce resources.

- Closure of domestic industries and /or problems for developing industries leading to unemployment particularly in a developing economy.

- Dumping / unfair competition.

- It is likely that the advantages of protectionism will result from the disadvantages of free trade and the disadvantages of protectionism will result from the advantages of free trade.

Level 1 responses will be assertive and lacking in explanations / mainly descriptive and/or or mainly lacking in relevance to the question.

Level 2 responses may contain some inaccuracies and will be one sided. Analysis will be explained at least in part and will be largely relevant to the question.

Level 3 responses will consider alternative policies / concepts etc. and will be balanced. Explanations of points raised will be offered and will be accurate and relevant to the question.

NOTE: if the analysis is not in the context of a developing economy, then L2 maximum.

5(b)

AO3 Evaluation

- Requires an assessment of the advantages and disadvantages of both free trade and protectionism in the context of a developing economy and a comparison of both policies which leads to

- A justified conclusion as to which policy may be best for a developing economy that wishes to trade internationally.

- Note: if the evaluation is not in the context of a developing economy, then no evaluation marks can be awarded.

A one-sided response cannot gain any marks for evaluation.

Please use a text box to show the mark split e.g., L2 5 L1 2

AO1 Knowledge and understanding and AO2 Analysis

AO3 Evaluation