What are “gains from trade”? What is the primary benefit of trade? Why is the idea that trade is beneficial counter-intuitive?
Answer to relevant QuestionsWhat is the difference between “absolute advantage” and “comparative advantage”? How can a less developed country like Mexico have a comparative advantage relative to the US?Hernando de Soto (a Bolivian economist) argues that property rights are even more important in the developing world than in rich nations. What is his argument? How could the absence of well-defined property rights affect ...Give some examples of rent seeking. If rent seeking is inefficient, will it be competed away? Why or why not?What is adverse selection? What is moral hazard? Give an example of these two problems arising between a firm and its suppliers. What is the role of the Board of Directors? Should the Board’s interests be aligned with managers or owners? Explain.
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