4.1 Benefits of international trade questions for IB Economics
99 questions on Benefits of international trade, written by Augment in the style of IB exam papers. Six of them are below in full, to answer on paper.
- IB Economics
- Part of 4 The global economy
- SL and HL
Questions by paper and level
SL and HL questions are for students at either level. HL only questions cover what only HL students study.
| Paper | SL and HL | HL only | All |
|---|---|---|---|
| Paper 1 | 16 | 11 | 27 |
| Paper 2 | 25 | 23 | 48 |
| Paper 3HL only | 0 | 24 | 24 |
| Every paper | 41 | 58 | 99 |
Counted on
Questions to try
Written by Augment in the style of IB exams, not past papers. Answer them on paper, then check each one against its markscheme with a free account.
The production possibilities curve (PPC) is a model built on a set of simplifying assumptions.
- (a)
Explain why a production possibilities curve (PPC) may be drawn as a straight line in some cases and as a curve bowed outward from the origin in others.
10 marks
- (b)
Using real-world examples, discuss the limitations of the view that countries should specialize according to comparative advantage.
15 marks
Read the extract and answer the questions that follow.
Text A — Should Kordova and Ilmaris specialize?
[1] Kordova and Ilmaris are neighbouring economies that both produce textiles and wheat. Each country has 100 workers available in the industries concerned, and each worker can be moved between the two industries without any loss of productivity. Kordova's workers are more productive in both goods (Table 1).
[2] A regional trade agreement would allow the two countries to trade freely. Negotiators have suggested that wheat and textiles could be exchanged at a rate of 1 unit of wheat for 2.5 units of textiles. Each country's choice involves an opportunity cost.
Table 1: Output per worker per week
Country | Textiles (units) | Wheat (units) |
|---|---|---|
Kordova | 20 | 10 |
Ilmaris | 12 | 4 |
- (a)
Define the term opportunity cost indicated in bold in the text (Text A, paragraph 2).
2 marks
- (b)(i)
Using information from Table 1, calculate the opportunity cost of one unit of wheat in each country.
2 marks
- (b)(ii)
Using your answer to (b)(i), identify which country has a comparative advantage in the production of textiles.
1 mark
- (b)(iii)
Using information from Text A and Table 1, sketch the production possibilities curve (PPC) of each country on a single diagram.
2 marks
- (c)
Using a PPC diagram, explain how both countries could gain from specialization and trade at the rate of exchange proposed in Text A, paragraph 2.
4 marks
Specialization in Ardena and Belvo
Ardena and Belvo each produce solar panels and maize. Table 1 shows the maximum output of one worker in a year in each country. Assume constant opportunity costs and no transport costs.
Table 1: Output per worker per year
Country | Solar panels (units) | Maize (tonnes) |
|---|---|---|
Ardena | 120 | 40 |
Belvo | 60 | 30 |
- (a)(i)
Using Table 1, calculate the opportunity cost of producing one tonne of maize in each country.
2 marks
- (a)(ii)
Using your answer to part (a)(i), identify which country should specialize in the production of solar panels.
1 mark
- (a)(iii)
State the range of rates of exchange, in solar panels per tonne of maize, at which both countries would gain from trade, and outline why.
2 marks
- (a)(iv)
Sketch, on one diagram, the production possibilities curves (PPCs) for one worker in Ardena and one worker in Belvo.
2 marks
Adam Smith argued that specialization and the division of labour are the main sources of a nation's wealth.
- (a)
Explain why Smith's ideas of specialization and laissez faire provide support for free trade between countries.
10 marks
- (b)
Using real-world examples, discuss the view that developing economies should never use trade protection.
15 marks
Mollandia's wheat exports make up less than 0.1 % of world wheat trade. Its farmers can sell as much wheat as they produce at the world price, but would sell nothing if they tried to charge more. Mollandian wheat therefore faces perfectly elastic demand.
Define the term perfectly elastic indicated in bold in the text.
2 marks
Avocado exports from Selvaro
Selvaro is a lower-middle-income economy in Central America whose highland farms grow avocados. It is a price taker in the world avocado market. Table 1 shows Selvaro's domestic demand and supply schedules for avocados. In 2025 the world price was US$3.00 per kg.
Table 1: Domestic demand and supply schedules for avocados in Selvaro (per year)
Price (US$ per kg) | Quantity demanded (thousand tonnes) | Quantity supplied (thousand tonnes) |
|---|---|---|
1.50 | 60 | 60 |
2.00 | 50 | 110 |
2.50 | 40 | 160 |
3.00 | 30 | 210 |
Note: 1 tonne = 1000 kg.
- (a)(i)
Using Table 1, identify the price of avocados in Selvaro if there were no international trade.
1 mark
- (a)(ii)
Using Table 1, calculate Selvaro's revenue from avocado exports in 2025.
2 marks
- (a)(iii)
In 2026 increased production in other countries reduced the world price of avocados to US$2.50 per kg. Using Table 1, calculate the percentage change in Selvaro's revenue from avocado exports.
2 marks
- (a)(iv)
Using Table 1, state the change in the quantity of avocados bought by consumers in Selvaro when the world price falls from US$3.00 to US$2.50 per kg.
1 mark
- (a)(v)
Outline why consumers of avocados in Selvaro pay a higher price under free trade than they would if there were no international trade.
2 marks
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More questions in The global economy
- 4.1Benefits of international tradeThis page
- 4.2Types of trade protection
- 4.3Arguments for and against trade protection
- 4.4Economic integration
- 4.5Exchange rates
- 4.6Balance of payments
- 4.7Sustainable development
- 4.8Measuring development
- 4.9Barriers to economic growth and development
- 4.10Growth and development strategies
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