1. Suppose there are two countries A and B producing two products X and Y. The unit labor requirement for two countries and two products are: ax = 1;ay =5;ax = 10;0% = 10 . Draw the line of product specialization. And discuss the five different scenarios for countries A and B. For each discussion, list: - If the world relative price falls into ... Country A produces ..., Country B produces ... . If the world relative price # 6 (0.2, 1), Draw the graph of "Gains from Trade" for Country A. 2. Now look at both countries A and B, suppose workers in both economies have identical preferences defined by U: UA = Biln(Cx) + Bzin(Cf); UB = Biln(CR) + Bzin(CF). where Cy is the consumption level for product X and Cy is the consumption level for product Y, in country i E (4, B). Suppose Q;, ic {A, B), je {X, Y} represents the production of product i in country j. New equilibrium world price ratio is: *. The total employment in both economies are: LA = 100, LB = 100. . Find the following exogenous and endogeous parts for this model open economy model - exogenous parameters - endogenous outcomes . And then describe the equilibrium. (similarly: Given ... exogenous parameters, ..endogenous variables are solved, if ... conditions are satisfied.) . Solve for the open economy equilibrium (suppose country A produce both products, type I)