Country A produces two goods: grapes and copper.Production of each good requires the use of labor, which is mobile between the two industries.Grape production also requires the use of land, while copper production requires the use of capital. Suppose the price of grapes is $2/pound and the price of copper is $8/pound.

a.Graph the marginal product of labor in production of grapes.Explain the relationship between this curve and the shape of Country A's PPF. A new technology allows more land to be used in the production of grapes. What happens with the MPL curve because of this technology?

b.Commodity prices are subject to high volatility. Ignore part a and suppose the price of copper falls to $6.Show the movement along the PPF that will occur as a result - that is, show the initial equilibrium production point and the shift to the new production point.What is the slope of the PPF at the new optimal production point?

c.What happens to the marginal product of labor in production of grapes as a result of the price change in the copper prices in part b?In the production of copper?How has the opportunity cost of copper production changed? Explain.

d.Country A can influence the world prices of copper because it has the largest copper reserves in the world. Moreover, the copper company is state owned, thus Country A's policies that impact copper prices can become political. Suppose the owners of land are big donors to the Country A's Blue Party. Will the Blue Party be in favor of higher copper prices?Suppose capital owners are big donors of the Country A's Red Party. Will the Country A Red Party favor higher prices of copper? Use real rental rates to explain your logic.