Question: Consider the following Classical labor requirements: (a) Why is there a basis for trade? (b) With trade, Italy should export ____ and Switzerland should export

Consider the following Classical labor requirements:

(a) Why is there a basis for trade?
(b) With trade, Italy should export ____ and Switzerland should export ____ because ____ .
(c) The international terms of trade must lie between ____ and ____ .
(d) If the wage rate in Italy is ‚¬4/hr, the wage rate in Switzerland is 3.5 francs/hr, and the exchange rate is 1 franc/‚¬1, what are the commodity terms of trade?

Shoes Italy Switzerland 8h/pr 4 hrgal 6 hr/pr 4 hr/gal

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