1.Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2.There is now also another country, Foreign, with a labor force of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1.Construct the world relative supply curve in terms of bananas.

2.Suppose that instead of 1,200 units of labor, Home has 2,400. How does this change the previous results? What if Home becomes half as productive (6 for apples and 4 for bananas)?

3.Japanese labor productivity is roughly the same as that of the United States in the manufacturing sector (higher in some industries, lower in others), while the United States is still considerably more productive in the service sector. But most services are not traded. Some analysts have argued that this poses a problem for the United States, because our comparative advantage lies in things we cannot sell on world markets. What is wrong with this argument?