Suppose that, starting from your initial WUK , WUS , e, and the resulting trading pattern in part (a) of Question 7, there is now a uniform 20 percent improvement in productivity in all of the U.K. industries (i.e., the labor coefficients for the five industries in the United Kingdom all fall by 20 percent).
(a) In this new situation, determine the goods that will be U.K. exports and the goods that will be U.S. exports.
(b) In this new situation, and keeping WUS at $20/day and e at $2/£1, calculate the upper and lower limits (in pounds per day) to the U.K. wage rate.