1. Suppose that imports increase supply. In terms of supply, demand and the consumer surplus, explain why would consumers prefer more imports?
2. Suppose that exports increase demand. In terms of supply, demand, and producer surplus, discuss why would producers prefer more exports?
3. Adam Smith studied a pin factory and found that one individual doing all tasks compulsory to make a pin could only make several pins per day. Specialization among the tasks in the factory, however, resulted in each person doing only one thing and the number of pins formed 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?