1. With reference to the Ricardian model, how can we demonstrate relative wages reflect productivity differences of two countries (under the assumption of two countries: home and foreign).

2. Using the Heckscher-Ohlin model:

Discuss the prediction that factor prices will be equalized among countries that trade.

Argue why, in the real world, factor prices are not equal across countries.

3. Discuss 5 policy outcomes arising from using strategic trade policy to promote exports in Pacific island countries.

4. When a country is 'small', imposing a tariff has no effect on the foreign (world) price because its demand is an insignificant part of world demand for the good. Justify this statement using graphical analysis and discussion.

5. Discuss four ways through which policy makers affect the amount of trade in a country. Provide specific examples from Pacific Island countries to support your arguments.