A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2012 · Q201 Mark

A government believes that it can reduce its trade deficit by the introduction of a tax on an export. When is this likely to be most effective?

Awhen demand for the export is price elastic

Bwhen the exporting country is a member of a customs union

Cwhen the exporting country is the major world supplier of the product

Dwhen the terms of trade of the exporting country are favourable

✓ Correct answer

C: when the exporting country is the major world supplier of the product

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2012 Paper 1 Variant 2, question 20.

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