Explain why countriestradeaccording tothefollowing question.

(1) Explain briefly whyabsoluteadvantagedoes notdrive trade.

(2)Mentionthenamesofthetwomajormodelsthatwereintroducedintheclasswhich explain howtwo countries tradeoccurs.

(3)Ineachmodel,whatfactorcreatescomparativeadvantage,andhowtheinternational equilibriumischaracterizedinthegraphs?Youcanonlyshowthegraphofproduction andconsumptionforoneofthecountries.Makesuretodrawgraphstosupportyour explanation.

(4) Explain how (import) tariffs affect the economy of the importing country. Make sure to mention the effects on prices, demand and supply. Also explain the merits and demerits of tariffs. You can use a graph, but it is not necessary.

(5)InRicardian model,whatfactorcreatescomparativeadvantage,and howthe internationalequilibrium is characterized inthegraphs?You can only showthegraph of production and consumption for oneofthecountries. Makesureto draw graphsto supportyourexplanation.

(6)InHeckscher-Ohlinmodel, whatfactorcreates comparativeadvantage,and howthe internationalequilibrium is characterized inthegraphs?You can only showthegraph of production and consumption for oneofthecountries. Makesureto draw graphsto supportyourexplanation. (7)Explain how(import)tariffsaffect theeconomy oftheimporting country using a diagram. Makesuretomentionhowtariffscausetheloss ofwelfareintheimporting country.

(8) Discuss why manycountries do notremovetariffs despitetheirharms on the economy.