Homework (Problem set I} due in week 3 (Jan, 23) 1. How are the patterns of international trade, that is, the pattern of what different countries export and import, explained? 2. To answer the following questions read Eaton and Kortum (2012}, putting Ricardo to work. (a) What are the three types of outcomes possible in Ricardo's minimalist setting? (b) How much do countries gain from trade? Which countries are shown to he the highest gainers in Eaton and Korturn (2012}? (c) What will he the decline in the gains from trade if falling trade costs lead to further increases in world trade? (d) Do countries benet from the technological improvements of their trading partners? What evidence is provided by Eaton and Kortum (2012}