There are two countries, NZ and AUS. NZ and AUS use the same technology for the production of food and cloth. The labour and capital endowments for the two countries are L=200 and K=120 for NZ and L=100 and K=40 for AUS. The inputs currently used in the production of each unit of food and cloth in NZ and AUS are given in the following table: Food Cloth (a) Which good is capital-intensive in NZ? Which good is labour-intensive in AUS? Which good is labour-intensive in NZ? Which good is capital-intensive in AUS? (2 marks) (b) Which country is labour-abundant? Which is capital-abundant? (1 mark) (c) Draw the PPF curves for the two countries making sure the two PPFs are consistent with what you know about the countries' capital and labour abundance and the capital and labour intensity of production. Now draw a tangent on each of the two PPFs using a common slope. Conclude from your graph how the two countries' relative supply functions of cloth compare with each other. (3 marks) (d) Assume that the two countries have the same relative demand for cloth. Draw a graph with the common relative demand curve and the two different relative supply curves of food and conclude which country has the higher autarky relative prices of cloth. ( 2 marks) There are two countries, NZ and AUS. NZ and AUS use the same technology for the production of food and cloth. The labour and capital endowments for the two countries are L=200 and K=120 for NZ and L=100 and K=40 for AUS. The inputs currently used in the production of each unit of food and cloth in NZ and AUS are given in the following table: Food Cloth (a) Which good is capital-intensive in NZ? Which good is labour-intensive in AUS? Which good is labour-intensive in NZ? Which good is capital-intensive in AUS? (2 marks) (b) Which country is labour-abundant? Which is capital-abundant? (1 mark) (c) Draw the PPF curves for the two countries making sure the two PPFs are consistent with what you know about the countries' capital and labour abundance and the capital and labour intensity of production. Now draw a tangent on each of the two PPFs using a common slope. Conclude from your graph how the two countries' relative supply functions of cloth compare with each other. (3 marks) (d) Assume that the two countries have the same relative demand for cloth. Draw a graph with the common relative demand curve and the two different relative supply curves of food and conclude which country has the higher autarky relative prices of cloth. ( 2 marks)