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The following table defines terms relevant to the basic Ricardian model of one factor and two goods. $a_{LC}$ = number of labor hours needed to produce a unit of chocolate in Home; $a_{LW}$ = number of labor hours needed to produce a unit of wine in Home; $a_{LC}^{*}$ = number of labor hours needed to produce a unit of chocolate in Foreign; $a_{LW}^{*}$ = number of labor hours needed to produce a unit of wine in Foreign; $P_C$ = the price per pound of chocolate on world markets; $P_W$ = the price per gallon of wine on world markets. 

          The following table defines terms relevant to the basic Ricardian model of one
factor and two goods.
$a_{LC}$ = number of labor hours needed to produce a
unit of chocolate in Home;
$a_{LW}$ = number of labor hours needed to produce a
unit of wine in Home;
$a_{LC}^{*}$ = number of labor hours needed to produce a
unit of chocolate in Foreign;
$a_{LW}^{*}$ = number of labor hours needed to produce a
unit of wine in Foreign;
$P_C$ = the price per pound of chocolate on
world markets;
$P_W$ = the price per gallon of wine on world
markets.
Show more…
The following table defines terms relevant to the basic Ricardian model of one factor and two goods. aLC = number of labor hours needed to produce a unit of chocolate in Home; aLW = number of labor hours needed to produce a unit of wine in Home; aLC^* = number of labor hours needed to produce a unit of chocolate in Foreign; aLW^* = number of labor hours needed to produce a unit of wine in Foreign; PC = the price per pound of chocolate on world markets; PW = the price per gallon of wine on world markets.

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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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The following table defines terms relevant to the basic Ricardian model of one factor and two goods: aLC = number of labor hours needed to produce a unit of chocolate in Home; aLW = number of labor hours needed to produce a unit of wine in Home; aLC** = number of labor hours needed to produce a unit of chocolate in Foreign; aLW** = number of labor hours needed to produce a unit of wine in Foreign; PC = the price per pound of chocolate on world markets; PW = the price per gallon of wine on world markets.
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Transcript

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00:01 Hello, to solve this problem we will follow the standard steps in international trade analysis.
00:08 First, determine the wage ratio i .e.
00:16 Ws divided by wf and the relative prices i .e.
00:21 Pn divided by wj where n belongs to 1, 2, 3 and j belongs to hnf.
00:35 First, we need to find the equilibrium pattern of specialization.
00:39 Since both countries produce strictly positive amounts of good 2, we will assume that they specialize in good 1 and 3.
00:47 Now, if we talk about relative labour productivity for good 1, then in the home country i .e.
01:08 H is z3, h and in foreign country i .e.
01:20 F it is z3, f.
01:25 Now, compare these relative labour productivities to determine their specialization...
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