Question
Given the following Ricardo-type table showing the amount of labor input needed to produce one unit of output of the two goods in the two
Given the following Ricardo-type table showing the amount of labor input needed to produce one unit of output of the two goods in the two countries:
Steel Cloth
United Kingdom 4 days 8 days
Germany 6 days 9 days
a. The United Kingdom has an absolute advantage in both goods and a comparative advantage in cloth.
b. The pre-trade price ratio in the United Kingdom is 1 steel : 2 cloth.
c. The United Kingdom has an absolute advantage in neither good but a comparative advantage in steel.
d. The pre-trade price ratio in Germany is 1 cloth : 1.5 steel.
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