Clearly, this relative wage does not depend on whether the price of a pound of cheese is $12 or $20, as long a gallon of wine sells for the same price. As long as the relative price of cheese – the price of a pound of cheese divided by the price of a gallon of wine – is 1, the wage of home workers will be three times that of foreign workers.
Notice that this wage rate lies between the ratio of the two countries’ productivities in the two industries. Home is six times as productive as foreign in cheese, but only one – and – a – half times as productive in wine, and it ends up with a wage rate three times as high as foreign’s it is precisely because the relative wage is between the relative productivities that each country ends up with a cost advantage in one good. Because of its lower wage rate, foreign has a cost advantage in wine, ever though it has lower productivity. Home has a cost advantage in cheese, despite its higher wage rate, because the higher wage is more than offset by its higher productivity.