Questions:
Directions: Please answer each of the following questions in a paragraph for each. Explain your thoughts with theory and examples where applicable.
1. Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?
2. What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.