B. Consider two sectors in the Mexican and U.S. economies: tradable goods (like apples) and nontradable goods

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B. Consider two sectors in the Mexican and U.S. economies: tradable goods (like apples) and nontradable goods (like haircuts). Suppose that Mexican labor demand and supply in the tradable sector is characterized by the equations ld 1w2 5 1A 2 w2/a and ls 1w2 5 1B 1 w2/b. Suppose the same holds in the nontradable sector, and suppose that initially there is no trade or migration between Mexico and the United States, with wages across the two sectors in Mexico equal.

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