Consider the following extension of the classical-type model.

Calculate the wage-rate limits for both countries and the exchange rate limits

Unit Labor Requirements Wage Rate (in country's Good a, Good a2 Good as Good as Good as own currency) 1 1 1.5 0.5 1.33 Country X 12/hr hr/unit hr/unit hr/unit hr/unit hr/unit 1 5 3 2 4 Country Y 10/hr hr/unit hr/unit hr/unit hr/unit hr/unit Suppose the fixed exchange rate is Y currency = 2.5. X curreny Unit Labor Requirements Wage Rate (in country's Good a, Good a2 Good as Good as Good as own currency) 1 1 1.5 0.5 1.33 Country X 12/hr hr/unit hr/unit hr/unit hr/unit hr/unit 1 5 3 2 4 Country Y 10/hr hr/unit hr/unit hr/unit hr/unit hr/unit Suppose the fixed exchange rate is Y currency = 2.5. X curreny