Question: 2. Consider the following economic model. There are two countries, England (E) and Portugal (P). Countries trade wine ('0) and cloth (c). Each country has

 2. Consider the following economic model. There are two countries, England

2. Consider the following economic model. There are two countries, England (E) and Portugal (P). Countries trade wine ('0) and cloth (c). Each country has 100 units of labor. Production technologies are as follows: (13(1)) 2 l5T0\"); qE(c) = {13%; (113(2)) 2 IP13\"); qP (c) = 5132),\"), where qi(j) denotes quantity produced by country 1' of good 3' and \"(3') denotes labor allocated to sector j in country 2'. Preferences in both countries are represented by the following utility function, u(v, c) = min{'u; c}. All markets are perfectly competitive. Set the price of cloth to 1 throughout.2 a) What are the unit input requirements for producing wine and cloth in England (1 mark)? b) Graph England's production possibility frontier under autarky (2 marks). c) Calculate autarky prices, consumption of goods and the allocation of labor in Por- tugal and England under autarky (2 marks). (:1) Graph the world relative supply and demand curve (2 marks). e) Calculate production and consumption of cloth and wine in Portugal and England under free trade. What is the free-trade equilibrium price? What is the wage in

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