1. (10 points) In the short run, the economy of Gryffindor can be described by the specific-factor model. Gryffindor produces 2 goods, apples and clocks, using common factor, troll labor, and specific factors: land in the apple industry and capital in the clock industry. (a) Suppose that because of the extreme flooding, the quantity of arable land in Gryffindor went down. Show graphically what happens in the new equilibrium. How does this change affect the employment in each sector and real wage of trolls? What happens with real earnings of land and capital owners? (b) Assume that Slytherin decided to help by increasing its level of FDI and investing some capital into the economy of Gryffindor. Show graphically what happens to the equilibrium in Gryffindor because of FDI. How does FDI affect the employment in each sector and real wage of trolls in Gryffindor? What happens with real earnings of land and capital owners there