Question: Suppose that each worker in the home country can produce 6 bushels of wheat or 4 yards of cloth. Assume that Home has fifty workers.

Suppose that each worker in the home country can produce 6 bushels of wheat or 4 yards of cloth. Assume that Home has fifty workers.

a) What is the no-trade relative price of wheat at Home? 

Suppose that each worker in the foreign country can produce 3 bushels of wheat or 3 yards of cloth. Assume that Home has one hundred workers.

b) What is the no-trade relative price of wheat in Foreign? 

c) In which good does Home have a comparative advantage and why?

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