(Solved): This exercise applies the basic Ricardian model of one factor and two goods. The table below contai ...

This exercise applies the basic Ricardian model of one factor and two goods. The table below contains the unit labor requirements in Foreign and Home for each of two goods. Use this information to answer the question that follows. \begin{tabular}{clc} & Chocolate & Wine \\ \hline Home & $a_{LC}=4$ hours per pound & $a_{LW}=5$ hours per gallon \\ \hline Foreign & $a_{LC}^{?}=2$ hours per pound & $a_{LW}^{?}=4$ hours per gallon \end{tabular} where: $\begin{array}{l}{a}_{LC}=\text{ number of labor hours needed to produce a unit of chocolate in Home; }\\ a_{LW}=\text{ number of labor hours needed to produce a unit of wine in Home; }\\ a_{LC}^{?}=\text{ number of labor hours needed to produce a unit of chocolate in Foreign; }\\ a_{LW}^{?}=\text{ number of labor hours needed to produce a unit of wine in Foreign. }\end{array}$ Which of the following statements is true? A. Home has the absolute and comparative advantage in wine production. B. Foreign has the absolute advantage in both chocolate and wine production and the comparative advantage in wine production. C. Foreign has the absolute advantage in both chocolate and wine production and the comparative advantage in chocolate production. D. Home has the absolute advantage in both chocolate and wine production and the comparative advantage in chocolate production.