This means that the real wage of a worker in terms of how much cheese can be purchased is equal to labor productivity in cheese production. In other words the amount of cheese that a worker can buy per period of work is exactly the same as the amount of cheese the worker can make in that same period. The real wage of cheesers in terms of wine is the quantity of wine that a cheese worker can buy with a unit of work. It is calculated by dividing the cheeser's wage by the price of wine, written as . Using the relationship between wages and prices when zero profit obtains in the cheese industry implies, This means that the real wage of cheesers in terms of wine is the product of labor productivity in the cheese industry and the price ratio.
Labor productivity gives the quantity of cheese a cheeser makes in an hour of work.
The price ratio gives the quantity of wine that exchanges for each unit of cheese. The product gives the quantity of wine that a cheeser can buy with a unit of work. To calculate the autarky real wage, simply plug in the autarky price ratio. To calculate the free trade real wage, plug in the free trade price ratio. It is calculated by dividing the workers wage by the price of wine, written as .