Think of a country-world, Germany and Turkey, producing 2 goods: cell phones denoted by T, and haircuts denoted by H. Each good is produced in competitive markets with labor as the sole input. Workers are paid their marginal revenue product. The hourly wage rate in Germany is W euro and in Turkey W* lira. The nominal exchange rate is S (lira/euro). Suppose that in one hour a German worker can produce Xt cell phones and Xh haircuts. Similarly, in Turkey the equivalent production per hour is Xt* and Xh*. Assume that Xt>Xt* and Xh=Xh*. a. The price of haircut in Germany will be lower than the price of haircut in Turkey whereas the price of cell phones will be the same in both countries. This is the Balassa-Samuelson effect combined with the theory of competitive advantage. b. The productivity of haircut in Turkey is higher than the productivity of haircut in Germany, whereas the opposite holds for the productivity of cell phones. This is the Balassa-Samuelson effect combined with the theory of competitive advantage. c. The price of both haircuts and cell phones is the same in both countries. This is the Balassa-Samuelson effect combined with the theory of competitive advantage. d. In equilibrium workers working on the cell phone industry will be paid more in Germany than in Turkey, but workers working in the haircut industry will be paid the same in both countries. This is the Balassa-Samuelson. e. In Germany workers will be paid more in the cell phone industry, whereas workers will be paid more in the haircut industry in Turkey because they are more productive. f. None of the above