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10. Using Figure 2-5, show that an increase in the relative price of wheat from its world relative price of 2/3 will raise Home's utility.

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10. Using Figure 2-5, show that an increase in the relative price of wheat from its world relative price of 2/3 will raise Home's utility. Cloth, ac (yards) Slope = 1 D 50 4o ------ Us Slope = -33 25 U1 Slope = -112 40 50 100 Wheat, aw(bushels) Answer: The increase in the relative price of wheat from its international equi librium of 2/ 3 allows Home to consume at a higher utilitv. such as at noint D

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