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Consider a Ricardian framework with two countries, France and Germany, and two products, beer and wine. In autarky, the relative price of wine is 1/3
Consider a Ricardian framework with two countries, France and Germany, and two products, beer and wine.
In autarky, the relative price of wine is 1/3 in France, and 2/3 in Germany.
At the trade equilibrium,
A. there is no trade between France and Germany
B. the world relative price of wine can be any value from 1/3 to 2/3, depending on the relative size of the countries.
C. French workers receive higher real wage in terms of wine
D. Germany imports beer
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