1. Discuss the effect of wage, rate changes and exchange of rate changes.

2. Explain why a change in the distribution of income in a country can change the shapes of the community indifference curve for the country. (page 82)

3. Explain the difference between the "gains from exchange" (consumption gain) and the "gains from specialization'' (production gain) Page 98

4. Why is an increase in the number of varieties of a good regarded as a gain from trade? Can you think of economic disadvantages associated with greater product variety? Explain.

5. Explain why a country's use of preferential duties is inconsistent with MFN treatment of trading partners by that country.

6. Do you think that it is ever possible to obtain a good indication of a precise degree of protection accorded by a country to its import-substitute industries? Why or why not? (Remember that, in addition to tariffs, protection is also provided by various non-tariffs barriers.)