1. What is opportunity cost? How does the concept help to explain why industrial workers in the developing world are paid less than those in the developed world?
2. What is absolute advantage? What is comparative advantage? According to most economists, which is the more useful concept for thinking about which countries will export what?
3. Make sure that you can work out, using a basic 2-good, 2-country, 1-input, Ricardean framework, which country has a comparative advantage in the production of which good. Make sure you can demonstrate why they could gain from trading.
4. On a graph of supply and demand, what happens to the demand curve for a potential export when we move from autarky to free trade? What happens to the supply curve for a potential import when we move from autarky to free trade? In each case, do consumers benefit from the move from autarky to free trade? Do producers? What does a comparison of the autarky price to the world price tell you about whether a good is a potential export or a potential import?
5. What is the compensation principle?
6. With the answers to the above question in hand, why do many economists not likerestrictions on imports and exports?
7. What are some of the reasons that have been offered to argue that countries willsometimes benefit from restricting or at least managing trade? Specifically, with reference to examples discussed in class:

Why are many post-Keynesians unimpressed by the argument that we must specialize and trade to have more stuff?

Why do many Greens worry about trade in natural resources?

What are some of the problems with trying to develop by producing commodities?

What does the Atlas of Economic Complexity tell us about the relationship between the types of products a country produces and its development prospects. Why might changing this mix of products be a path dependent process? Why might countries that produce core products grow faster?

What are some examples of international trade enabling those with market power to exploit those with less market power? What are some examples of them reshaping institutions to enhance their capacity to do so?

7.When graphing the exchange rate for a particular country (call this the "home" country, and the other country "foreign"), is it better to measure the exchange rate as the amount of the foreign's currency one must give up to get one unit of the home currency, or to measure it as the number of units of home currency one must give up to get one unit of the foreign currency? Why?

8.Why do countries try to avoid sudden devaluations of their currency (e.g. Lebanon today)?