Problem 1. The market for chicken sandwich, considered a normal good, is in equilibrium. Examine the effect of the following events on the equilibrium price and quantity of chicken sandwich.
(a) An increase in consumers' preference for beef
(b) Producers expectation of future profit
Problem 2. President Obama is considering implementing trade tariffs and quotas against US trading partners. As head of the President's Economic Advisory Team:
(a) Argue the point that free trade is beneficial to the US and that the President should not implement the proposed trade restriction.
(b) Examine the benefits and drawbacks of each of the President's proposal:
i. Tariffs
ii. Quotas
Problem 3. What causes the US to have comparative advantage over other countries in certain products?