Step 4. In order to conjecture the circumstances in these two countries under free trade consider the following hypothetical scenario based on Ricardian model . Assume throughout that those two countries (the United States and Ecuador ) are the only two countries in the world , at least for purposes of trade . There are two goods : computers and textiles . Consumers in both countries always spend half of their income on computers and half of their income on textiles . The only factor of production is labour Each U.S. worker can produce 4 computers or 2 textiles per unit of time . Each Ecuadorian worker can produce 2 computers or 3 textiles per unit of time . There are 100 workers in the U.S. and 80 workers in Ecuador a) Derive the world relative demand curve relating the relative demand for computers to the relative price of computers . Do this algebraically , and then show what the curve looks like in a diagram (put the relative price of computers on the vertical axis and the relative quantity of computers demanded on the horizontal axis ). b) Derive the world relative supply curve of computers (put the relative price of computers on the vertical axis and the relative quantity of computers supplied on the horizontal axis ). c) Put in the same figure the world relative demand curve for computers that you found in part (a) and the world relative supply curve of computers that you found in part (b). Determine the equilibrium relative price of computers and the equilibrium relative quantity of computers under free trade . d) Under free trade , which country produces which good (s)? How many units ? e) Who gains from trade ? Who loses from trade ? State workers ' stance towards free trade in each country , i.e., do they support or oppose free trade