Explain the difference in the way tariffs and quotas operate as methods of protection.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [4] For knowledge and understanding of tariffs and quotas. Candidates should define: tariffs: a tax that is imposed on an imported product to make it more expensive. (Up to 2 marks) quotas: a limit on the imported products that are allowed into a country (Up to 2 marks) (KU: up to 4 marks)
2. [4] For application of tariffs and quotas to the operation of protectionism, stressing the difference between them in the way they operate. Candidates should apply each method to how they can be used to protect a domestic industry: tariffs: operate through an increase in price, with the effect depending on the PED. (Up to 2 marks) quotas: operate through a limit on imports. (Up to 2 marks) (APP: up to 4 marks)
3. [8] For analysis of the importance of free trade in preference to protectionism. (Up to 8 marks)
4. [4] Candidates should consider the potential advantages of free trade: world output can be increased resources are allocated more efficiently consumers have a wider range of products to choose from there can be a substantial increase in economic growth this will lead to an improved standard of living and quality of life (Up to 4 marks)
5. [4] Candidates should consider possible situations where protectionism could be preferred to free trade: support for infant/sunrise industries, at least as a temporary measure support for sunset/declining industries, at least as a temporary measure support for a strategic industry protection against dumping a means of reducing a current account deficit tariffs can be used as a means of raising government revenue (Up to 4 marks)
6. [8] (AN: up to 8 marks total)
7. [4] For evaluative comment on the extent to which free trade should always be preferred to protectionism. (EV: up to 4 marks, reserve one mark for a conclusion)