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Hi, I really hope that you can help me with this question. I am currently studying for my upcoming exam, but this question remains a

Hi, I really hope that you can help me with this question. I am currently studying for my upcoming exam, but this question remains a mystery to me. I tried multiple ways to calculate it, but my answer does not answer the question down below. Thank you in advance!

Given is the standard 2-good, 2-country Ricardian model of international trade. Home has a labour force of 200 hours and Foreign of 100 hours.

HomeForeign
X (hours/unit)23
Y (hours/unit)10.5

But this changed due to the earthquake. A major earthquake in Foreign halves labour productivity in Foreign in both sectors. Home has a labour force of 100 hours and Foreign of 50 hours. I calculated that the values 2, 6 and 1/2 remain unchanged (in figure 1).

Question: discuss and explain the implications of the earthquake in Foreign for the distribution of the gains from trade between Home and Foreign.

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