Adam Smith saw a close connection between a nation's wealth and its ability and willingness "freely to engage" in trade with other countries.
a. Based on what you have learned in this chapter, what is the connection?
b. Explain why trading with countries that are "most different" from our own is likely to generate the most benefits. Which differences are of central importance?
c. Under what circumstances are there no benefits from a country specializing and trading with other countries?
d. Illustrate the argument from part (c) in a simple diagram of a country's production possibilities boundary.