2. Recall our simple model of a city as a trading entity with production of the export good governed by the fixed proportions production function: 1" El . (1) gm. = min i [1'2 (lie The equilibrium was described by the following four equations: (3930:\" = N (2) _ (It i _ _ \"(A-\"N? _ U' (3) PL PA tL = 1 N l l N (E) er? 2 L (-5) E 3% IN 1 3. Given the production function, (1): what will be the labourcapital ratio1 equilibrium? 1in ale b. Briey interpret each of the equations. (3. Let a\" and oak be fixed parameters and 11; pa. and 1.0.; be determined in the rest of the world and therefore taken as given in the city. 'What is the importance of the function ll)? Why is it necessary for it to be increasing in city size: L? d. 'Nhat do you think will happen to the city if 3944 (this is essentially agricultural land rent---the value of land outside the city) rises? Explain briey