The marginal product of labour curves corresponding to the production are as follows:

(a) Suppose the price of wheat relative to that of leather is 5. Determine graphically the

wage rate and the allocation of labour between the two sectors.

(b) Using the graph drawn for problem 2, determine the output of each sector. Then

confirm graphically that the slope of the production possibility frontier at that point equals relative

price.

Workers employed	MPL sector 1	MPL sector 2
5	5.4	3.96
10	2.3	2.28
15	1.76	2.22
20	1.74	1.96
25	1.94	1.7
30	1.76	1.68
35	1.58	1.68
40	1.16	1.6
45	1.18	1.54
50	1.18	1.38

(c) Suppose the relative price of wheat rises to 8. Repeat (a) and (b).

(d) Calculate the effects of the price change from 5 to 8 on the income of the specific

factors in sectors 1 and 2.