Question 1: Ricardian Model Suppose there are two countries Home and Foreign, and two industries: Manufacturing (M) and Agriculture (A). In Home country, marginal products of labor are given by MPLH = 1 and MPLA = 2, and in Foreign country MPL = 1 and MPLA = 1. The labor endowments are given by H = 50 and IF = 400. Both countries have identical preferences represented by the utility function U = QM4Q//4. (a) Under the free trade equilibrium, find the equilibrium relative quantity (QM/QA)' and relative price (PM/PA)' in the integrated world market. Show your results using the relative demand and supply curves. (10) (b) Under the free trade equilibrium, find the production levels of manufacturing and agricultural products in both countries. (10) (c) Due to an increase in immigration, labor force in the Home country has increased to H = 200. Find the effect on (QM/QA)' and (PM/PA) in the integrated world market and present it on a graph. (10) Question 1: Ricardian Model Suppose there are two countries Home and Foreign, and two industries: Manufacturing (M) and Agriculture (A). In Home country, marginal products of labor are given by MPLH = 1 and MPLA = 2, and in Foreign country MPL = 1 and MPLA = 1. The labor endowments are given by H = 50 and IF = 400. Both countries have identical preferences represented by the utility function U = QM4Q//4. (a) Under the free trade equilibrium, find the equilibrium relative quantity (QM/QA)' and relative price (PM/PA)' in the integrated world market. Show your results using the relative demand and supply curves. (10) (b) Under the free trade equilibrium, find the production levels of manufacturing and agricultural products in both countries. (10) (c) Due to an increase in immigration, labor force in the Home country has increased to H = 200. Find the effect on (QM/QA)' and (PM/PA) in the integrated world market and present it on a graph