1. Why might it be difficult for a buyer and seller to agree on a price when imperfect information exists?
2. What are some of the ways a seller of labor (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information?
3. what is the problem of moral hazard?
4. For each of the following purchases, say whether you would expect the degree of imperfect information to be relatively high or relatively low:
   1. Buying apples at a roadside stand
   2. Buying dinner at the neighborhood restaurant around the corner
   3. Buying a used laptop computer at a garage sale
   4. Ordering flowers over the internet for your friend in a different city
5. In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios.
   1. Who has the absolute advantage in the production of rubber or radios? How can you tell?
   2. Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine.) Which country has a comparative advantage in the production of radios?
   3. Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber?
   4. In this example, does each country have an absolute advantage and a comparative advantage in the same good, or not?
   5. In what product should Japan specialize? In what product should Malaysia specialize?

6. Why might a low-income country put up barriers to trade, such as tariffs on imports?

7. Why does the United States not have an absolute advantage in coffee?