Hi! I am not sure about Question 3 a) and b) and c),

Question 3 Consider an economy with two goods. In both industries, there are many competitive rms and there is free entry. The production functions for rms producing good one and two are y1(l) : zll and y2(l) = 221 (Production Functions) The rms take 21 and 22 as given, outside their control. These are in fact determined by 1 Z1 : and 22 = L2 m where L1 is total employment in industry 1 and L2 is total employment in industry 2. The total number of workers in this economy is L = 3/4. Call the wage they receive w. a) What is the relation between total output in industry 1 (Y1) and the level of employment in this industry (L1)? What is the analogous relation for industry 2? b) Derive the average cost schedule for these industries, and which industry has economies of scale? c) (Bonus question) Suppose the demand satises Demand for goods 1 _ Price of goods 2 Demand for goods 2 Price of goods 1 Compute the autarky equilibrium of this economy (Find employment levels in the two industries and outputs, and relative price of the two goods.)