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Consider the following Ricardian Model with 2 economies: Germany Portugal Labor Supply 200 workers 200 workers Wine 1000 units/worker 800 units/worker Beer 400 units/worker 300 units/worker (d)...

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Economics

Consider the following Ricardian Model with 2 economies:

Germany

Portugal

Labor Supply

200 workers

200 workers

Wine

1000 units/worker

800 units/worker

Beer

400 units/worker

300 units/worker

(d) Show graphically that Germany gains fromtrade. Carefully label your graph.

(e) Which country has higher wages? Whatdetermines the real wage at the national level? Explain.

(f) Calculate real wages in France in autarkyand free trade? How do real wages change in France after opening tofree trade? (Hint: Assume a international relative price of winethat makes sense in this model)

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