An economy can produce good 1 using labour and capital and good 2 using labour and land. The total supply of labour is 100 units. Given the supply of capital and land, the marginal products of labour for the two goods are as follows:

Workers Employed MPL in Sector1 MPL in Sector 2

10 150 140

20 115 105

30 90 85

40 72 70

50 60 60

60 50 52

70 42 45

80 36 40

90 32 37

100 30 36

a) Suppose that the price of good 1 is $1 and the price of good 2 is $2. Determine graphically the wage rate and the allocation of labour between the two sectors. [8 points]

b) Suppose that the relative price of good 2 falls to 1. Repeat a).[8 points]

c) Calculate the effects of the price change on the income of the specific factors in sectors 1 and 2. [9 points]

This question uses the hecksher ohlin model I believe