International Economics 8th Edition by Dennis Appleyard, Alfred Field

Exercise 3

In the example in Question 2, what are the limits to the wage rate in each country, other things being equal? What are the exchange rate limits?
Question 2
Consider the following Classical labor requirements:
( a ) Why is there a basis for trade?
( b ) With trade, Italy should export _____ and Switzerland should export _____ because _____.
( c ) The international terms of trade must lie between _____ and _____.
( d ) If the wage rate in Italy is €4/hr, the wage rate in Switzerland is 3.5 francs/hr, and the exchange rate is 1 franc/€1, what are the commodity terms of trade?