1. REASONS FOR INTERNATIONAL SPECIALIZATION What determines which goods a country should produce and export?
2. THE WORLD TRADE ORGANIZATION What is the World Trade Organization (WTO) and how does it help foster multilateral trade? (Check the WTO Web site at http://www.wto.org/.)
3. ARGUMENTS FOR TRADE RESTRICTIONS Firms hurt by lower-cost imports typically argue that restricting trade will save U.S. jobs. What's wrong with this argument? Are there ever any reasons to support such trade restrictions?
4. COMPARATIVE ADVANTAGE Suppose that each U.S. worker can produce 8 units of food or 2 units of clothing daily. In Fredonia, which has the same number of workers, each worker can produce 7 units of food or 1 unit of clothing daily. Why does the United States have an absolute advantage in both goods? Which country enjoys a comparative advantage in food? Why?