Consider the Ricardian model with

two countries, Home and Forei

gn, and two goods, X and Y.

If Foreign workers have a higher

real wage than Home workers an

d Home country has a

comparative advantage in g

ood X, we can conclude that:

(a)

Foreign country has absolute disadvantage in good Y.

(b)

Home country has absolute

disadvantage in good X.

(c)

Foreign country cannot benefit fr

om trade with Home country.

(d)

If trade is allowed, in Foreign

country, those labours that are

employed in the

production of

good X will lose from trade wher

eas the ones employed in the pr

oduction of good Y will

gain from trade.

Explain your answer clearly. There have been mixed answers between B and D - unsure as to which is correct