1. Assume that a country is endowed with equal amounts of K and T. Prices are P_X = Py = $2 and the country's total labor force is L =300= Lx + Ly. Labor is fully mobile between the two sectors. K is specific to the X sector and T is specific to the Y sector. Total endowment of K is 180 and total endowment of T is 180. Marginal products are given as: MPL^X= K/Lx and MPL^Y= T/Ly. MPK^X= Lx/Kand MPT^Y= Ly /T.
   1. How is labor distributed between the X and Y sectors in equilibrium? Suppose: P_X increases by 200% and Py by 100%.
   2. What is the new labor distribution?
   3. Has output of X and Y changed?
   4. What happens to
2. The real wage of workers
3. The real return to capital
4. The real return to landowners
5. Perform the same analysis again (solve b-d again), but for a situation where P_X increases by 50% and Py remains stable. How is your answer different?