a. Suppose that the number of workers doubles in Home. What happens to the Home PPF and what happens to the no-trade relative price of wheat?

b. Suppose that there is technological progress in the wheat industry such that Home can produce more wheat with the same amount of labor. What happens to the Home PPF, and what happens to the relative price of wheat? Describe what would happen if a similar change occurred in industry.

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Cloth, ac (yards) Slope--(MPLcMPLw) =-1/2 = 1 00 = 50 MPLw. L= 100 MPLw. L'= 200 Wheat, Qw (bushels) Cloth, Qc (yards) MPLcL =50 Slope -1/4 Slope =-1/2 MPLw L 100 MPL w' L 200 Wheat, Qw (bushels)