classical model of trade-clothing fish cutlery?

Question

italy 9hours/unit 3/unit 16h/unit
spain 10h/unit 2.5h/unit 15/unit

Explain what would happen in the of trade if the DFS model to relative wages and pattern of trade if there is uniform increase in productivity i in all industries in the foreign country. what will happen to real income in each of the two countries?

Answer 1

Real income in both countries would rise.

The trade route would strengthen, and become more efficient.

The real income of both would rise.

It is a classic shift to the right of the production possibilities curve, which is the only true way to increase the productivity of any economy.