Use the simplified offshoring model with two activities and the information below to answer the following questions. There are two countries, Japan and Portugal. There are two activities: assembly, which is low-skill-labour-intensive, and product development, which is high-skill-labour-intensive. Final good is called JPod. Portugal has: WP L = 1, 000 and WP S = 5, 000. Japan has: WJ L = 30, 000 and WJ S = 90, 000. The costs of capital and trade are uniform across production activities. 1. [25 Points] Which country has the higher relative wage of low-skilled labour? 2. [25 Points] Suppose the two countries engage in trade. Which activity will Japan outsource? Explain. 3. [25 Points] Draw relative labour supply and demand diagrams for Portugal and Japan on separate graphs. 4. [25 Points] Suppose the cost of capital in Portugal decreases. What do you expect will happen to the relative wage in each country?