If the post-trade equilibrium with Pc is = Pw = $20, the wage of workers in Foreign relative to the wage of workers in Home will be equal to 2.5.
A wage is known to be a kind of payment that is said to be paid by an employer to their employee for the work that they have done in a given amount of time.
Note that from the question;
aLW = 5 hours per gallon
a*LC = 2 hours per pound
SO to find the wage = 5/2
= 2.5
Therefore, If the post-trade equilibrium with Pc is = Pw = $20, the wage of workers in Foreign relative to the wage of workers in Home will be equal to 2.5.
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aLC = 6 hours per pound
aLW = 5 hours per gallon
a*LC = 2 hours per pound
a*LW = 6 hours per gallon
In post-trade equilibrium with Pc = Pw = $20, the wage of workers in Foreign relative to the wage of workers in Home will be equal to:
