The following is Figure 5.10 from the text: The following is Figure 5.11 from the text: 0 5 Os 11 Output of shoes, Qs Relative price of computers, Pc/Ps in Home lue to B gration S A An increase of both labor and capital in shoe production causes an increase in shoe output and a decrease in computer output The following is Figure 4.2 panel (a) from the text: Output of shoes, Qs Relative price of computers, slope = (PC/PS) QS1 A Output of computers, Qc Qc1 U Home PPF Output of computers, Qc In this question you will derive the Heckscher-Ohlin theorem by using the Rybczynski theorem. (15 pts.) a. Start with the no-trade equilibrium as shown in panel (a) of Figure 4-2. Now allow Home to increase its labor force through immigration. Draw the new PPF and add a new point, B, to show where the no-trade production and consumption will occur. Draw the Rybczynski line between A and B. (See Figure 5-11 as an example of the effect of immigration.) What is the effect on the production and consumption of computers relative to shoes? b. Now assume that Home and Foreign have the same technologies, but that Foreign has more labor than Home (prior to Home allowing immigration). Compare the Home and Foreign PPF's after Home allows immigration. Do you expect point B, on the figure you drew for part a. to be the no-trade equilibrium for Foreign? Why or why not. c. Place a new point, A*, representing the no-trade equilibrium for Foreign. How do the relative no-trade equilibria for Home and Foreign compare? Will the pattern of trade for the two countries differ versus the original analysis in the text? Why?