Consider two countries Home and Foreign producing goods using only one factor of production, Labor.  These are the marginal products of labor. Home has 100 people and foreign has 50 people.   Home:                     Wheat                     4 bushels                                  Cloths                     2 yards Foreign:                 Wheat                     1 bushel                                   Cloths                     1 yard           Assuming there is no trade, draw production possibility frontiers of two countries. With no trade, what are the relative prices of wheat and cloths in two countries? What will happen when they begin to trade?

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