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Could you please provide step by step solution? I would be very grateful if you provide a clear solution. Problem 1. (Ricardian model) [week 2].

Could you please provide step by step solution? I would be very grateful if you provide a clear solution.

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Problem 1. (Ricardian model) [week 2]. Consider two countries, Home and Foreign which are closed to international trade. Home has 1200 units of labor available, and Foreign has 800 units. Both countries can produce two goods: apples and bananas. Home's unit labor requirement in apple production is 3, while in banana production is 2. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. d) Assume now that the two countries are open to trade with each other. Which country has comparative advantage in apples? And in bananas? Explain. e) Construct the world relative supply curve. Show it in a graph. D Assume that the world relative demand takes the following form: (Demand for applesMDemand for bananas) = (Price of bananas)!(Price of apples), that is (DA " De) =1 \" (PA ' Pa) . Plot the relative demand curve in the graph in e). Compute the equilibrium relative price of apples. g) Describe the pattern of trade (who exports what?). Explain

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