Problem
1. Explain the difference between the "gains from exchange" (consumption gain) and the "gains from specialization" (production gain).
2. Suppose a country that is producing within its production possibilities frontier in autarky experiences an 8 percent rate of unemployment. Is it possible for it to gain from trade if the rate of unemployment remains approximately the same?
3. "The inability of factors to move from one use to another in production will completely take away any possible gains from trade." Agree? Disagree? Explain.