(a) Explain the stepped relative supply curve in the Ricardian Model of trade. (b) Consider the following information on two countries - A and $B$ , for a particular year: Population (in millions) Capital stock per worker (in international prices) $A 17.8 $37, 854 B 7.2 $5, 721$ Under the assumption that good $X$ is labour intensive relative, to good $y$ , which country will have a comparative advantage in the production of $X$ and why?

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(a) Explain the stepped relative supply curve in the Ricardian Model of trade. (b) Consider the following information on two countries - A and

B

, for a particular year: Population (in millions) Capital stock per worker (in international prices)

A 17.8 $37, 854 B 7.2 $5, 721

Under the assumption that good

X

is labour intensive relative, to good

y

, which country will have a comparative advantage in the production of

X

and why?

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