Question 3: Ricardian Model of International Trade Consider the Ricardian model. There are two countries: Home and Foreign. Both can produce two goods: corn and oil. Home has 100 units of labor available. Home' s unit labor requirement in corn production is 2, while in oil production is 10. Foreign has a labor force of 120. Forciani unit labor requirement in com production is 4, while in oil production it is 12. Now suppose world relative demand takes the following form: Demand for oil Price of com (PW Demand for com Price of oil (PW and that the world relative price of corn is 6 = 1/4. 1. Which country has an absolute advantage in the production of each good? Explain. 2. Which country has a relative advantage in the production of each good? Explain. 3. Find the value of parameter & in the world relative demand function. 4. Calculate the equilibrium wage rate. 5. Do countries benefit from international trade? Explain using the two methods studied in class applied to this particular case