Trade Problem Set 70 3-1

1. Provide a brief explanation for each of the following questions.

A. Does the utility of an individual who consumes two goods rise or fall when the real wage of one good rises while the real wage of the other remains the same?

B. Does the utility of an individual who consumes two goods rise or fall when the real wage of one good rises while the real wage of the other falls?

C. Why do price differences between countries stimulate trade?

D. Which groups are likely to benefit very shortly after trade liberalization occurs?

E. Which groups are likely to lose very shortly after trade liberalization occurs?

International Trade Theory and Policy - Chapter 70: Last Updated on 1/06/08