Student videos

Gains from Trade - Key Assumptions

  • Levels: AS, A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

Trade theory at A-level and IB rests upon several important assumptions. This video provides a brief summary of them and how they can be challenged for strong evaluation.

Gains from Trade - Key Assumptions

Assumptions behind the standard theory of comparative advantage, specialisation and trade

  • Constant returns to scale – i.e. no economies of scale – which might amplify (increase) the gains from trade
  • Factor mobility between industries (geographical + occupational mobility) workers are assumed to be equally productive in whatever industry / job they do and then can switch work easily
  • No trade barriers such as import tariffs and import quotas and other trade frictions (non-tariff barriers)
  • Low transportation costs to get products to market – high logistics costs might erode any comparative advantage between nations
  • No externalities from production and/or consumption


Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u