Assume that Home and Foreign produce only two goods - Butter and Wheat. Home has 80 units of labour available. In Home, the unit labour requirement in Butter production is 8 and in Wheat production it is 4. On the other hand, Foreign has 90 units of labour available. Foreign's unit labour requirement in Butter production is 15, while in Wheat production it is 3.

a. Graph the world relative demand curve along with the world relative supply curve.

b. What is the free-trade equilibrium relative price of Butter?

c. Describe the pattern of specialization and trade.

d. Show that both Home and Foreign gain from trade.