2. In this question you are asked to analyze the effect of international trade on the de mand for domestic labor. To this endg assume that output is produced according to a production function Y = F (NF, ND), where NF is the amount of foreign labor employed in the production of output Yg and ND is its domestic counterpart. Their costs per unit are wF and 103 , respectively. Assume that the increased openness of an economy is represented by a decrease in the cost of foreignl labor.) 10F. (a) W'rite down the cost function of the rm. (b) Consider an initial level of labor costs1 (mg 3 10;?) Using three carefully labelled di agrams with ND on the xaxis and NF on the yaXis, show the costminimizing combination of inputs for the cases of (i) perfect substitutes; (ii) perfect comple ments and (iii) an inbetween case. Explain verbally why the point you show in the gure is cost minimizing. (0) Assume that wF decreases from war to 10f, but that 1.03 stays at its original level tug]? . Analyze graphically the effect of this decrease of the cost of foreign labor on ND: using three new graphs. Againg consider the same three cases of production functions as in part (b). In each case1 show the substitution and the scale effects. (d) What is the difference between outsourcing and hiring foreign labor