Consider the following Classical labor requirements: (a) Why is there a basis for trade? (b) With trade,

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 ____ 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?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...