Question # II. (40 points) Consider an economy which is producing two goods computers (C) and shoes (S) using two factors of production capital and labor. To produce one computer, it requires 20 units of capital and 5 units of labor. To produce a pair of shoes, it requires 4 units of capital and 2 units of labor. Now, suppose the price of one computer is $80 and the price of a pair of shoes is $20. The total amount of capital available in the economy is 320 units and the total amount of labor available is 100 units. (:) (4 points) Calculate the capital labor ratios used in computers and shoes. Which good is more capital-intensive? (b) (6 points) Calculate the amount of computers and shoes produced in the economy. (c) (6 points) Now suppose the total endowment of capital increases from 320 to 360 units while the total endowment of labor remains at 100 units. Calculate the amount of computers and shoes produced with the new endowments of capital and labor. (d) (4 points) State and verify the Rybczynski's theorem using your answers to parts c) and d) above. (e) (6 points) Using the information on goods prices and the production function for the two goods calculate the wage and the rental rate of capital. (f) (14 points) Suppose the price of computer increases to $90 but the price of shoes remains at $20. State and verify the Stolper-Samuelson theorem (Hint: you need to show the changes in the real wage and the real rental of capital as you did on the homework)