Consider the Roy economy discussed in class, in which workers have het- erogeneity in skills employed in different sectors. Assume that the skill of a worker as hunter, m is drawn from a Uniform distribution on the (0,10) interval, and the skill of a worker as a sherman, 1.52 is drawn from a Uniform distribution on the (0,10) interval, independent of how large is his skill level as a hunter. Assume that the wage is the product of the worker skill times the price of the product (which is always true if we measure skill by the number of pounds of meat the worker can obtain in a given day). Assume that the price of meat 1:1 is 5, and the price of sh p2 is 5. Workers sort themselves into sectors based on their specic skill set. Assume that a worker chooses to hunt if, and only if, W1 > W2. That is, the worker chooses to hunt if his earnings as a hunter are larger than his earnings as a sherman. Denote by S the variable that indicates the worker's choice of sector: S equals one when the worker decides to hunt, and S equals 2 when the worker decides to sh. In other words: 8 1 ifW1>W2 2 ifW2>W1 Question 7 (10 points) Now, assume that the price of meat goes up. Now, hunting skills are more valuable in the market. Assume that p1 = 15 and p2 = 5. a) Draw a graph displaying on the xaxis the set of possible values for earnings in the hunting sector, and on the yaxis, the set of possible values for earnings in the shing sector. b) Find the proportion of workers that will choose to hunt. That is, nd Pr[S = 1]. c) Find the average earnings of workers that choose to hunt. That is, compute E [WIS = 1]. Compare this number with the one you found on part (c) of the previous question? Explain your answer. d) Find the average level of hunting skills of workers that choose to hunt. That is, compute E[u1|S = 1]. Is this number larger than the number you found for part ((1) of the previous question? Explain your