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The following table defines terms relevant to the basic Ricardian model of one factor and two goods. Relative Price of candy, (Pc/Pw) aLC = number
The following table defines terms relevant to the basic Ricardian model of one factor and two goods. Relative Price of candy, (Pc/Pw) aLC = number of labor hours needed to produce a unit of candy in Home O aLW = number of labor hours needed to produce a unit of whiskey in Home; ajc RS aLC = number of labor hours needed to produce a aLW unit of candy in Foreign; aLW = number of labor hours needed to produce a unit of whiskey in Foreign; Pc = the price per pound of candy on world markets; PW = the price per gallon of whiskey on world LC markets. a LW The figure to the right shows the world relative supply of candy (RS). Using the line drawing tool, add the world relative demand for candy such that each country specializes in the production of the good for which it has a L/aLC ...........Relative quantity comparative advantage. Properly label this line. of candy (-0.5,-0.75) Carefully follow the instructions above and only draw the required object. According to your diagram, Foreign specializes in V, while Home specializes in
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