Use the RELATIVE DEMAND -RELATIVE SUPPLY framework in the following.Assume that Land is specific to AG and Capital is Specific to MANU.

1:BIG and SMALL(ish):Assume Home and Foreignhave identical preferencesbutHome has relatively more Capital (K) than Foreign but proportionally less land (T).Suppose Home is 5 times larger than Foreign.

(2 points) a)Explain how the relative sizes of the two countries determines the equilibrium World Relative Prices (Pm/Pa) and the pattern of trade.

(3 points) b)Show that both countries willGain from Tradebut explain why Foreign gains more.