Question #3: Consider the model of a firm that produces final goods using R&D and components as inputs, with cost data as follows: Components: Total costs of production = Pc .Qc = 200 Earnings of high-skilled labor = WH Hc = 50 Earnings of low-skilled labor = WL .Lc = 50 Earnings of capital = R .Kc = 100 Share of total costs paid to high-skilled labor = 50/200 = 25% Share of total costs paid to low-skilled labor = 50/200 = 25% R&D: Total costs of R&D = PR .QR = 200 Earnings of high-skilled labor = WH .HR = 60 Earnings of low-skilled labor = WL .LR = 40 Earnings of capital = R .KR = 40 Share of total costs paid to high-skilled labor = 60/200 = 30% Share of total costs paid to low-skilled labor = 40/200 = 20% a. In which factor(s) is components intensive? In which factor(s) is research intensive? b. Suppose that due to the opening of trade, the relative price of R&D increases, APR/PR = 10%, whereas the price of components stays unchanged, APC/PC = 0. Calculate the change in the wages of high skilled and low-skilled labor