Lesson 4.2.6.2

4.2.6.2 Trade Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson 4.2.6.2, Trade: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. What is the principle of comparative advantage?

    • A country should specialise in producing goods for which it has the lowest opportunity cost
    • A country should avoid trade and produce all goods domestically
    • A country should specialise in goods that have the highest price in the world market
    • A country should produce every good it can with the fewest resources possible

  2. What is absolute advantage?

    • The ability to produce a good at a lower opportunity cost than another country
    • The ability to sell goods at a higher price in world markets
    • The ability to produce a good using fewer resources than another country
    • The ability to set tariffs that protect domestic producers

  3. What does the model of comparative advantage show about specialisation and trade?

    • Specialisation and trade always reduce total output in every case
    • Trade only benefits countries with an absolute advantage in all goods
    • Specialisation has no effect on total output, which is fixed
    • Specialisation and trade can increase total output compared with no trade

  4. Which of these is an example of a tariff?

    • A payment made by the government to exporters
    • A tax on imported goods
    • A rule requiring firms to hold a minimum reserve of cash
    • A limit on the number of imported cars allowed each year

  5. What is a quota in international trade?

    • A rule setting the exchange rate for a particular currency
    • A limit on the quantity of a good that can be imported or exported
    • A tax on the value of goods imported into a country
    • A payment from the government to domestic producers

  6. What is an export subsidy?

    • A payment from the government to firms that sell goods abroad
    • A tax paid by exporters to the government on each unit sold
    • A limit on the quantity of goods a country can export
    • A loan made by the central bank to banks that trade abroad

  7. What is a customs union?

    • A group of countries that shares a single central bank and currency only
    • A group of countries that has no trade barriers between any countries in the world
    • A group of countries that sets a fixed exchange rate for its currencies
    • A group of countries that agrees a common external tariff on imports from outside the union

  8. A country produces 1 unit of labour's output as either 4 units of wheat or 2 units of cloth. Country B produces 1 unit of labour's output as either 1 unit of wheat or 1 unit of cloth. Which country has comparative advantage in cloth?

    • Country B, which gives up 1 unit of wheat per unit of cloth, compared with 2 for Country A
    • Country A, which gives up 2 units of wheat per unit of cloth, compared with 1 for Country B
    • Neither country, because both have the same productivity in cloth
    • Country A, because it produces more units of wheat with the same labour

  9. Using the same data, which country has absolute advantage in wheat?

    • Neither country, because the two countries produce wheat at the same cost
    • Country A, which produces 4 units of wheat from one unit of labour, compared with 1 for Country B
    • Country B, which produces 1 unit of wheat from one unit of labour, compared with 4 for Country A
    • Country B, because its opportunity cost of wheat is lower in cloth terms

  10. A tariff is imposed on imported cars. What is the most likely effect on the domestic market?

    • The domestic price falls, consumers gain, and domestic producers lose sales
    • The domestic price is unchanged, but government revenue falls to zero
    • The domestic price rises, domestic producers gain sales, and consumers lose surplus
    • The domestic price rises, but domestic producers lose all their sales

  11. How does a quota differ from a tariff in its effect on the domestic market?

    • A quota raises the price and can give rents to importers, while a tariff gives revenue to the government
    • A quota gives revenue to the government, while a tariff gives rents to importers
    • A quota and a tariff always have identical effects on government revenue
    • A quota lowers the price of imports, while a tariff always raises it by more

  12. Why might a country adopt protectionist policies?

    • To reduce government revenue from trade taxes
    • To make all goods cheaper for domestic consumers in every case
    • To increase the number of imports of every good
    • To protect infant industries or jobs in sectors facing competition from imports

  13. What is one consequence of countries adopting protectionist policies?

    • Retaliation by trading partners can reduce world trade and the gains from specialisation
    • World trade expands rapidly, because each country protects its own markets
    • All countries become self-sufficient with no change in prices
    • Comparative advantage is abolished, so no country trades at all

  14. What are the main characteristics of the Single European Market?

    • Free movement of goods, services, capital and people between member states, with common trade rules
    • Fixed exchange rates between member states and a common central bank
    • A single government that sets tax rates for every member country
    • Tariffs on all trade between member countries and with the rest of the world

  15. Which of the following best describes the role of the World Trade Organisation?

    • It sets international trade rules and helps resolve disputes between member countries
    • It sets the exchange rates and interest rates for member countries
    • It lends money to countries to finance their government spending
    • It controls the production of goods in each member country

  16. Evaluate the use of tariffs to protect domestic jobs.

    • Tariffs have no effect on jobs, because they affect only prices
    • Tariffs may protect some jobs in the short run, but they raise prices for consumers and can provoke retaliation
    • Tariffs always create jobs without any costs for consumers or other countries
    • Tariffs always destroy jobs in every case, so they should never be used

  17. Evaluate the costs of international trade for a country.

    • Trade can cause structural unemployment and dependence on foreign markets, though it usually brings net benefits
    • Trade has no costs at all, and every country gains equally in every case
    • Trade always lowers living standards because it reduces output
    • Trade only costs firms, and it has no effect on workers or consumers

  18. Why can a country that is absolutely less efficient in every good still benefit from trade?

    • Because it can specialise in goods where its opportunity cost is lowest, and trade still increases total output
    • Because absolute advantage is the only basis for trade, so less efficient countries gain
    • Because the exchange rate automatically equalises all productivity differences
    • Because trade always raises the productivity of every industry in the country

  19. Evaluate a customs union compared with a free trade area.

    • A customs union has no internal trade between members, while a free trade area has full trade
    • A free trade area has a common external tariff, while a customs union lets members set their own
    • A customs union and a free trade area are the same, with identical rules in all cases
    • A customs union has a common external tariff, which limits policy freedom, while a free trade area lets members set their own tariffs

  20. Evaluate whether protectionist policies improve national welfare.

    • Protection has no effect on welfare, because it only affects exporters
    • Protection always improves national welfare because it raises all prices
    • Protection can benefit specific producers, but it often reduces overall welfare through higher prices and lower efficiency
    • Protection always reduces welfare for producers but increases welfare for all consumers

All AQA Economics quizzes