Assume that Home and Foreign produce two goods, TVs and cars, and use the information below to answer the following questions:

In the No-Trade Equilibrium Home Foreign WageTV = 12 WageC = ? Wage*

TV = ? Wage*

C = 6 MPLTV = 4 MPLC = ? MPL*

TV = ? MPL*

C = 1 PTV = ? PC = 4 P*

TV = 8 P*

C = ?

a. What is the marginal product of labor for TVs and cars in Home? What is the no-trade relative price of TVs in Home?

b. What is the marginal product of labor for TVs and cars in Foreign? What is the no-trade relative price of TVs in Foreign?

c. Suppose the world relative price of TVs in the trade equilibrium is PTV/PC =

LO.1