Figure 5.4 Textiles Nation I's ppf Nation 2's ppf Computers b) Does this country necessarily have a greater stock of capital? 3. a) Use the ppf for Nation 2 in Fig 5.4 and likely terms of trade to show the effect of trade on Nation 2. Indicate the levels of production, consumption, exports, imports, and the change in welfare. 4). a) If demand is the same for products in both countries, which country, Nation 1 or 2, will exhibit a higher relative wage (w/r) before trade? b) Explain what will cause wages to change in Nation 1 as a result of trade. c) If demand is the same for products in both countries, which country, Nation 1 or 2, will exhibit a higher relative wage after trade? d) If factor-price equalization does occur, will Nations 1 and 2 end up with the same per capita income? Figure 5.4 Textiles Nation I's ppf Nation 2's ppf Computers b) Does this country necessarily have a greater stock of capital? 3. a) Use the ppf for Nation 2 in Fig 5.4 and likely terms of trade to show the effect of trade on Nation 2. Indicate the levels of production, consumption, exports, imports, and the change in welfare. 4). a) If demand is the same for products in both countries, which country, Nation 1 or 2, will exhibit a higher relative wage (w/r) before trade? b) Explain what will cause wages to change in Nation 1 as a result of trade. c) If demand is the same for products in both countries, which country, Nation 1 or 2, will exhibit a higher relative wage after trade? d) If factor-price equalization does occur, will Nations 1 and 2 end up with the same per capita income