1. Consider the following 'monetized' Ricardian model of international trade. Let w = wage rate, qunit = the amount of labor time required to make 1 unit of the good in question, PC = price of cloth, PW" = price of wine, = British pound, are = escudo (old Portuguese currency) Assume that the exchange rate is e = 13$. Let E= England and 1 Pt = Portugal. -_m (1) England . (2) Portugal a. Which country has the comparative advantage in Cloth? Explain how you gured this out. b. Give the range in which the exchange rate can 'lie' and still have trade according to comparative advantage. c. Go back to the exchange rate of e %' What range can WP' lie and still have trade according to comparative advantage? lesc . . (I. Stay with the exchange rate of e - 3. What range can WE he and still have trade according to comparative advantage