Question 2 Consider the Specic Factors Model for a small open economy that produces only agricultural goods and manufacturing goods. Assuming that the economy initially exports agricultural goods, a. Use the labor allocation diagram to analyze the effects of a fall in the price of manufacturing goods on the allocation of labor between the two sectors as well as the effect on the nominal wage of labor. b. Use the PPF diagram and the budget line to analyze the effects of this fall in the price of manufacturing goods on the level of outputs for both sectors. Can you conclude how the level of consumption and export of agricultural goods can get affected as a result of this change in the international trade market? (assume no information on the consumer preferences and substitution effects) c. Assume that due to immigration, the total size of labor force in the country has decreased. Show the effect of this change on the nominal wages using the labor allocation diagram (Hint: Impose the change from one side of the labor allocation diagram to make the analysis easier). d. Use the PPF diagram and the budget line to analyze the effects of this fall in the size of labor force on the level of output and consumption