Assume that Home and Foreign produce only two goods Cars and TVs. Home has 400 units of labour available. In Home, the unit labour requirement in car production is 40 and in TV production it is 2-3. On the other hand. Foreign has 450 units of labour available. Foreign's unit labour requirement in car production is '35, while in TV production it is 15. a. Graph both Home's and Foreign's production possibility frontiers. [3 points] b. Calculate the opportunity cost of producing cars in terms of TVs in both Home and Foreign. [3 points] c.1n the absence of trade, what would the price of cars in terms of TVs be in both countries? Why? [3 points] (1. Construct the world relative supply curve. Explain clearly the steps of deriving world relative supply curve in details. illustrate it on a diagram. [3 points] Now suppose world relative demand takes the following form: Demand for carsfdemand for Tvs = price of Tstprice of Cars. e. Graph the world relative demand curve along with the world relative supply curve. [3 points] f. What is the freetrade equilibrium relative price of cars? [3 points] g. Describe the pattern of specialization and trade. [3 points] h. Show that both Home and Foreign gain from trade. [3 points] i. Suppose that the number of workers increases from 400 to 300 in Home. Find the new equilibrium relative price. What can you say about the efciency of world production and the gains from trade between Home and Foreign in this case? [3 points]