Inordertoconjecturethecircumstancesinthesetwocountriesunderfree trade, consider the following hypothetical scenario based on Ricardian model. Assume throughout that those two countries (Armenia and Costa Rica) are the only two countries in the world, at least for purposes of trade. There are two goods: computers and headphones. Consumers in both countries always spend half of their income on computers and half of their income on headphones. The onlyfactorofproductionislabour.EachArmenianworkercanproduce2 computersor 3 headphones perunit oftime.EachCostaRican workercan produce 1 computer or 4 headphones per unit of time. There are 50 workers in Armenia and 50 workers in Costa Rica.

1.Underfreetrade,whichcountryproduceswhichgood(s)?Howmany units?

2.Whogainsfromtrade?Wholosesfromtrade?Stateworkers'stance towardsfreetradeineachcountry,i.e.,dotheysupportoropposefree trade?