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The world demand for Home's labor relative to its demand for Foreign's labor is shown by the curve RD. Note that the flats (i.e., the
The world demand for Home's labor relative to its demand for Foreign's labor is shown by the curve RD. Note that the "flats" (i.e., the horizontal segments) in RD correspond to relative wages that equal Home's relative productivity advantage. The world supply of Home's labor relative to Foreign's labor is shown by the line RS. Assume in this multi-good, single-factor Ricardian model that there are NO transportation costs. Part 2 The equilibrium relative wage in this market is equal to 55. (Enter your response as an integer.) Part 3 According to the rule for allocating world production, Home will only specialize in those goods for which its relative productivity advantage is 5
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