Pearson Edexcel IGCSE · Commerce

Trade: Practice Questions

3 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Trade.

8 questions28 marksFree, no account

Question 1

1 mark

What is the primary difference between a trade quota and a tariff?

Question 2

1 mark

If the currency of Country X appreciates significantly against the currencies of its major trading partners, what is the most likely immediate impact on Country X's balance of trade?

Question 3

1 mark

A country imposes a high tariff on imported electronic components. If the domestic demand for the finished products made from these components is highly price elastic, what is the most probable outcome for domestic manufacturers?

Question 4

3 marks

Explain the difference between visible trade and invisible trade in the context of a country's international commerce.

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Question 5

6 marks

Explain why a depreciation of a country's currency is generally considered unfavorable for businesses that rely heavily on imported raw materials.

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Question 6

6 marks

Analyze the impact of a common external tariff on a business located outside a trading bloc trying to sell goods to a member country.

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Question 7

4 marks

Governments often use trade protection methods to support domestic industries.

(a) Distinguish between a tariff and a quota.
(b) Explain one advantage and one disadvantage of trade protection for the domestic consumers of that country.

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Question 8

6 marks

A group of neighboring countries forms a trading bloc and establishes a common external tariff (CET).

(a) Explain what is meant by a common external tariff.
(b) Analyze two benefits for a business operating inside this trading bloc.
(c) Explain one difficulty an exporter from outside the bloc might face when trying to sell goods to countries within the bloc.

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