Question 22N.1.HL.TZ0.3
| Date | November 2022 | Marks available | [Maximum mark: 25] | Reference code | 22N.1.HL.TZ0.3 |
| Level | HL | Paper | 1 | Time zone | TZ0 |
| Command term | Evaluate, Explain | Question number | 3 | Adapted from | N/A |
Explain how a free trade area is different from a common market.
[10]
Marks should be allocated according to the paper 1 markbands for May 2022 forward, part A.
Answers may include:
- Terminology: Free trade area, common market.
- Diagrams: Candidates may answer the question without the use of diagrams, but they might decide to devise a diagram using for example a Venn diagram to help explain the difference.
- Theory: An explanation that a free trade area is an agreement between two or more countries to reduce or remove tariffs and other barriers to trade between them. A common market is a level of economic integration in which countries share common external barriers to trade. Between members there are no controls on the movement of goods and services and there is freedom of movement for the factors of production.
There were many good responses to this part of the question. A significant proportion of candidates were able to offer a clear distinction between a free trade area and a common market. Where there was doubt it tended to be in explaining the features of a common market. Some candidates were not clear that a common market includes the free movement of the factors of production. However, many candidates were able to score well on this part of the question.
Using real-world examples, evaluate the decision of a country to remain a member of a trading bloc.
[15]
Marks should be allocated according to the paper 1 markbands for May 2022 forward, part B.
Answers may include:
- Terminology: Trading bloc.
- Diagrams: AD/AS diagram to illustrate growth. Economies of scale to indicate falling costs with increased market size. Trade diagram illustrating the removal of restrictions to trade.
- Theory: Explanation of the impacts of a trading bloc on the economy in terms of employment, economic growth, trade creation, trade diversion and economies of scale.
- Synthesis (evaluate): Advantages including trade creation, greater access to markets, economies of scale. Freedom of movement of labour and greater employment opportunities, stability and cooperation, increased economic growth, greater consumer choice, increased competition, lower prices, improved efficiency. Disadvantages including trade diversion, impact on sovereignty, the effect on multilateral trade negotiations such as those of the WTO. Unemployment in less competitive member states. Candidates who cite the EU as an example may also consider arguments pertaining to membership in the Eurozone.
- Example(s): A relevant real-world example(s) of a country who is a member of a given trading bloc.
It was clear that candidates in general knew what a trade bloc was. It was also an area where candidates were able to demonstrate a pleasing familiarity with real-world developments in this area of the syllabus. The question emphasised a decision to remain a member of a bloc: many candidates did not apply this angle to their answer and instead focused on a more generalist response that only partially addressed the demands of the question. Much use, understandably, was made of the UK decision to leave the EU but the question focused on the merits of a decision to remain in one.