Recall the example of Lecture 2, in which we had a model economy with two countries and two goods. What terms of trade would make sense for both countries?

In other words, how much grain should England have to give to Portugal to receive one unit of wine? Hint: By reallocating labor resources, each country is able to trade grain for wine at a certain rate, even in the absence of international trade. Hint 2: This problem is not very complicated.