CAIE A-Level Economics 6.1.4 Limits of Advantage Theories

CAIE A-Level Economics 6.1.4 Limits of Advantage Theories
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise evaluating absolute and comparative advantage when transport costs, trade barriers, factor immobility, changing costs, strategic aims and distribution alter predicted…

How this is tested

  • explain when transport costs or tariffs exceed the opportunity-cost gain from trade
  • challenge fixed-cost assumptions using scale economies, technology and changing factor quality
  • evaluate trade choice through strategic industries, adjustment costs and distribution of gains

Question 28

[Maximum number: 1]

What is not a limitation of the theory of comparative advantage?

A

the movement of factors of production between countries

B

governments' imposition of trade restrictions

C

one country being more efficient in the production of all goods

D

transport costs outweighing any comparative advantage