Why do economists generally argue against protectionism?
Tariffs and quotas raise prices for consumers, protect inefficient industries, invite retaliation, and reduce overall welfare — even when they save specific jobs, the cost per job saved typically exceeds the wage. Learn it step by step →
The Global Economy is a core part of A-Level Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.
Key concepts
TariffTax on imports.
QuotaQuantitative limit on imports.
SubsidyPayment to domestic producers.
DumpingSelling exports below cost or below home price.
Anti-Dumping DutyTariff to offset alleged dumping.
Infant Industry ArgumentJustification for temporary protection of new industries.
Free Trade AreaMembers remove internal tariffs.
Customs UnionFTA plus common external tariff.
Single MarketCustoms union plus free movement of factors.
WTOWorld Trade Organisation - sets rules since 1995.
Trade CreationNew trade between members displacing higher-cost domestic supply.
Trade DiversionTrade shifts from low-cost non-members to higher-cost members.
Absolute AdvantageProducing a good using fewer resources.
Comparative AdvantageLower opportunity cost in a good.
What your exam board covers
Where The Global Economy sits in each exam board's specification. Tap a board to see what it lists.
Questions where students often pick the tempting wrong answer — make sure you know the right one:
Why do economists generally argue against protectionism?✗ Protectionism always makes a country richer by keeping money at home.✓ Tariffs and quotas raise prices for consumers, protect inefficient industries, invite retaliation, and reduce overall welfare — even when they save specific jobs, the cost per job saved typically exceeds the wage.
What is the principle of comparative advantage?✗ A country should produce whatever it can make best.✓ Countries should specialise in producing goods with lower opportunity cost relative to others — even a country worse at everything still has a comparative advantage in something.
Is a trade deficit necessarily bad?✗ A trade deficit always means a country is losing wealth and failing economically.✓ Not necessarily — it can reflect strong domestic demand, attractive investment opportunities, or borrowing to fund growth. Context matters more than the headline figure.
A tariff is best described as:✗ A subsidy to imports✓ A tax on imports
A customs union differs from a free trade area by:✗ Free movement of people✓ Common external tariff
Practise The Global Economy — free games
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