Unit Labor Requirements: Numbers of workers required to produce one unit of output Home Foreign 1 Wheat (1 bushel) 1 worker E worker Cars (1' unit) 2 workers 1 worker Given the information in the table above, answer the following questions using the Ricardiau model discussed in class. Assume that Ilome country has 16 workers (E = 16) and Forcing country has 6 workers (F = 6). Show your work a) The no-trade (autarky) relative prices of a car in Home (g) is b) The no-trade (autarky) relative prices of a car in Foreign (JDL) is P'L c) In which good does Home have a comparative advantage? d) In which good does Foreign have a comparative advantage? e) Trade Equilibrium: suppose the world relative price of cars is 2.5 wheat (pir = 2. 5) assume that at the world relative price, Home consumes 4 cars and 10 bushels of wheat, while Foreign consumes 4 cars and 8 bushels of wheat. Using the figures below, draw and label the following: i. The production possibilities frontiers in Home (PPF) and Foreign (PPF*). ii. The world price line (WPL) in both countries. iii. Identify the production point in Home (B) and Foreign (B*) in the trade equilibrium. iv. Identify the consumption basket in Home (C) and Foreign (C*) in the trade equilibrium. v. Add the indifference curves for each country (U and U*) in the trade equilibrium. vi. Label the exports and imports for each country. [Hints: Note that cars are represented on the horizontal axis! You don't need the no-trade (autarky) equilibrium.] HOME FOREIGN Wheat Wheat (bushels) t (bushels) 1 Cars (units) Cars (units)