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