Please show full work and if you can put answers on paper please.

1 Specific-Factors Model [40 points| Suppose the U.S. and Canada trade corn C' and desks D with each other. Desks are produced using labor and capital, while corn is produced using labor and land. 1. (3 points) Which factor of production is specific to corn production, which one to desk production? 2. (7 points) The following graph shows the optimum in the U.S. without trade. Suppose trade increases the price of corn in the U.S., P, but leaves the price of desks, Pp, unchanged and so the relative price Pe/Pp becomes larger with trade. Show graphi- cally how this affects U.S. production of desks and corn. Carefully label the quantities consumed and produced with trade. Will corn production in the U.S. increase or decrease? 3. (6 points) The graph below shows the wage in both the desk and corn industry. In the labor market equilibrium, the wage in both sectors must be equal, i.e. We=Fc-MPLc =Pp-MPLp =Wp. The intersection of both curves therefore determines the equilibrium wage W and how much labor is used in both sectors