Imagine two rms one and two - operating in two separate towns. Each have a production function (I: = 6tf(Et: Kt) Where 6, is a random productivity draw that gets drawn each period (e.g. each year). The mean of 19, is the same for both rms, however rm one has more variable productivity shocks. Le. rm one is more likely to have high or low draws of 19,. For each part below, be sure to explain your reasoning. 1. If both rms face identical labor supply curves, on average what will be the relative wages paid by rm 1 and 2? Le. is the wage paid by rm 1 higher, the same, or lower than rm 2 on average. What will be the level of unemployment in each town? 2. Now imagine that both rms face labor markets with downward nominal wage rigidity. Now, what will be the relative wages paid by rm 1 and 2 on average? 3. After several periods, if both rm 1 and 2 draw the same productivity level (the I9,s are the same), what will likely be the relative levels of output between the rms? 4. Which rm will be more protable over the long-run