Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B. At the trade equilibrium, there is no trade between A and B. country A receives higher real wage in terms of G1. the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries. country B imports G2.

Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B. At the trade equilibrium, there is no trade between A and B. country A receives higher real wage in terms of G1. the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries. country B imports G2.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2.
In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B.
At the trade equilibrium,
there is no trade between A and B.
country A receives higher real wage in terms of G1.
O the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries.
country B imports G2.

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