1. Suppose that the world price of sugar is 20 cents a pound, Brazil does not trade internationally, and the equilibrium price of sugar in Brazil is 10 cents a pound. Brazil then begins to trade internationally.
• How does the price of sugar in Brazil change? Do Brazilians buy more or less sugar? Do Brazilian sugar
growers produce more or less sugar?
• Does Brazil export or import sugar and why?
2. The United States exports services and imports coffee. Why does the United States gain from exporting services and importing coffee? How do economists measure the net gain from this international trade?