3,

US: 10S = 1R= 1HOUR VN: 20R=1S=1HOUR

EX S, IM R EX R, IM S

G: 1S= 1R

US: 10R-1R=9R 20S-1S=19S

VD- Comparative advantage

US UK
STEEL (ton/h) 6 1
RICE(ton/h) 4 2

Lower relative cost or higher relative productivity

1, Relative productivity of US compare to UK in steel production = 6/1 = 6
Relative productivity of US compare to UK in rice production = 4/2= 2
 US have a comparative advantage in steel

Relative productivity of UK compare to US in steel production = 1/6

Relative productivity of UK compare to US in rice production = 1/2
 UK have a comparative advantage in rice.
2, US have a comparative advantage in steel so US will specialize in steel production and
export steel
UK have a comparative advantage in rice so UK will specialize in rice production and export
rice
3,

US: 6S=4R UK: 1S=2R

EX S EX R

G: 6S=8R

US: 8R-4R=4R UK: 1,5S-1S=0,5S

 US
Without trade, in domestic market: 6S=4R
In trade with 1S=1R, US exchange 6S for 6R
 US gain from trade: 6R-4R=2R

G: S =0,5R =>US HAVE NO TRADE => 6S> 4R

G: 1R =0,2 S=> UK: 2R > 1S => 12R> 6S
RANGE OF MUTAL BENEFIT: 4R< 6S<12R