Fig. 1 shows an extract from a newspaper and a table about international trade. THE BENEFITS OF INTERNATIONAL TRADE Companies can achieve increased specialisation, savings in costs and expand to become multinationals. Consumers have a wider range of goods available. COUNTRY X'S TRADE FIGURES Types of international trade $m Visible exports 95 000 Visible imports 128 000 Invisible exports 105 000 Invisible imports 82 000 [Figure 1] Use Fig. 1 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (May/June 2014). The mark or mark type is shown in brackets.

1. [1] (a) (i) One mark for trade between countries.
2. [3] (ii) Any two points × 1 mark each and 1 mark for a valid example: • concentrating on one particular task/process/product • so that skill/output is improved • in the factory it may involve division of labour • concentrating on what one does best • example may be general or specific to a country • the production of a small range of goods to produce surpluses which are then traded between countries • South Africa producing diamonds and gold for export • Botswana producing beef and beef products for export • Mauritius producing sugar and offering tourist services. Any other relevant point.
3. [2] (b) Any one point explained × 2 marks: • by dealing in bulk quantities so taking advantage of economies of scale • by trading with countries where there are trade agreements so saving in import duties • by selling goods that fail to sell in the home market so avoiding wastage • by using labour in countries where labour costs are cheap • by transporting in bulk quantities so reducing transport charges • by importing raw materials from where they are cheaper and manufacturing goods for export • by using an agent such as a factor or broker • by carrying out entrepot trade – importing to export at higher prices. Any other relevant explained point.
4. [4] (c) ($95000 – $128000) = –33000 (1 mark) (105000 - $82000) = +$23000 (1 mark) -$33000 - +$23000 (1 mark) = –10000 (1 mark)/deficit. (Could be calculated as (95000 + $105000) – ($128000 + $82000) = –$10000). OFR applies if the correct answer is given without working, award full marks.
5. [2] (d) One mark for each correct answer and one mark for each reason × 2: (i) Invisible export – the American tourist is making use of services offered by Country X who is earning foreign currency by selling these services.
6. [2] (ii) Visible import – Country X is bringing toys into the country from Germany and using foreign currency to pay for them. (If type of trade is incorrect but the reason is correct – award mark for the reason.)
7. [6] (e) Level 2 (4-6 marks) Has discussed whether or not consumers have a wider range of goods available to them as a result of the increased number of multinationals in the world and has given a reasoned opinion. (NB if a one-sided answer is given, award full marks). Multinationals are very large companies that have interests in many countries and a head office in one country usually where it originated. Multinationals produce a very wide range of goods such as tyres, cars, chemicals, pharmaceuticals and electronics. They have a very large share of the worldwide market. As the standard of living of many consumers improves, the demand for a wide range of goods increases. Multinationals are able to fulfil this demand because they produce goods in many parts of the world, produce many different goods and are able to supply a choice of goods at competitive prices. Multinationals have been able to take advantage of the formation of trading blocs and the lack of customs barriers between countries in the trading bloc. They can manufacture in one country and sell to consumers in all the other countries of the trading bloc without paying import duties, so making the goods cheaper and more attractive to consumers. On the other hand, not all consumers can afford to buy a wide range of consumer goods. They may not have the income. They may be located where multinationals have little influence and so the growth of multinationals does not affect them. They tend to buy from local suppliers and small enterprises. Some of the goods may be of better quality and so in demand. Many goods may be on offer because of better transport that is able to reach more places. More goods may be available within trading blocs which encourages trade. Some of these multinationals may create monopoly situations where they control what is produced, in what quantity and at what price. As a consequence the range of goods or the availability of goods may be reduced and consumers can have a restricted choice. Level 1 (1-3 marks) Has commented on whether or not consumers have a wider range of goods available to them as a result of the increased number of multinationals in the world with/without an opinion. Multinationals influence world trade. They are very important in the global market. They provide a wide range of goods. They often sell at reasonable prices. Many goods are purchased from multinationals by consumers. Consumers are demanding more goods. They may have more money to spend. They want different goods.