Consider a country, call it Home, that produces crayons (C) and ash drives (F) using skilled labor (S) and unskilled labor (L). The techniques of

Consider a country, call it Home, that produces crayons (C) and áash drives (F) using skilled labor (S) and unskilled labor (L). The techniques of production in each industry are Leontief, and hence unit factor requirements are Öxed and given by: aSC = 1; aSF = 3; aLC = 4; aLF = 2: 

1. Which industry is skill intensive? How does the skilled-to-unskilled labor ratio in each industry depend on the relative wage wS=wL? 

2. Suppose that the world price of crayons is $12 and the world price of áash drives is $16. Assume that the Home country produces both goods. What are the free trade factor price levels wS and wL? 

3. What is the share of revenue going to skilled labor in each industry? 

4. Suppose the world price of áash drives increases to $26, while the price of crayons remains at $12. What are the new values of wS and wL? How have they changed? What theorem could you have used to predict this result?