Suppose that a country has 200 workers and that its technology requires 1 worker-hour per unit of food and 2 worker-hours per unit of cloth. In autarky, it employs 100 workers in each of the two industries. With free trade, it faces world prices of $10 per unit of food and $30 per unit of cloth. Suppose that in autarky, workers in both industries are paid $8 per hour.

What is the wage of labor with free trade, in dollars? What has happened, as a result of trade, to the real wages of labor? Compute real wages both in terms of the price of food and the price of cloth, that is, W/Pfood and W/Pcloth before and after free trade. Based on the real wages, comment on whether workers become better off or worse off after free trade.