1. Assume that imports increase supply. In terms of demand, supply and consumer surplus, why would consumers prefer more imports?
2. Assume that exports increase demand. In terms of demand, supply and producer surplus, why would producers prefer more exports?
3. Adam Smith studied a pin factory and found that 1 individual doing all tasks necessary to make a pin could only make several pins per day. Specialization among tasks in the factory, however, resulted in each person doing only one thing and the number of pins produced per worker increased to thousands of pins per day. He then wrote a book called The Wealth of Nations which was about specialization and trade. Do you think citizens in closed economies (e.g., North Korea or the old Soviet Union) that do everything for themselves, including things they are not very good at or that involve resources they do not have, and do not trade or compete are better off than citizens in competitive market economies that specialize and engage in international trade?