(1) Assume Home produces 2 goods, clothing (C) and food (F). Clothing is produced using labor (L) and capital (K), while food is produced using labor (L) and land (T). The total supply of labor, capital, and land are 1,200, 1,000, and 1,600, respectively. Labor is mobile across sectors. All markets are competitive. Home's production functions for clothing and food are given by: Qc = Ly* K2/3 QF = LY/ 71/2 (2 points) a. The marginal product of labor employed in clothing production is the first order derivative of Qc with respect to Lc, i.e., MPLo = dQo/dLc. Substituting K with the total capital stock, the production function for clothing becomes Qc = 1001". Applying Eco 360, Fall 2020 wage wage W PCMPLC P,MPLF total labor supply Figure 1 the power rule of differentiation, it yields MPLc = dQo/dle = 1927/3. What is the relationship between MPLe and Le? What can you say about the opportunity cost of labor in clothing production? (1 point) b. Sketch a PPF which satisfies the above relationship between MPLy and Lc. (2 points) c. As shown in Figure 1, the wage level in Home is determined by the intersection of two labor demand curves. Show graphically how labor allocation and output mix respond to an increase in capital stock