Fill in the blanks
the following ricardo type table shows the labor input required per unit of output in each of the two industries in each of the two countries. Suppose that Germanz is a much larger country in terms of production and income than the UK. In this situation, other things equal, when the countries engage in trade, the posttrade price ratio (terms of trade) would tend to settle______________, and __________________would therefore tend to have relatively large gains from trade
UK: Steel = 3days, Cloth= 9days
Germany: Steel: 5 days, Cloth= 10 days
a) toward a value of 1 cloth = 3 steel; the UK
b) toward a value of 1 cloth= 2 steel; the UK
c) toward a value of 1 cloth= 2 steel, Germany
d) toward a value of 1 cloth = 2.5 steel; both countries