Question: 5. Consider an HO type trade model with two goods (computers and shoe), two factors (capital and labor), and two countries (home and foreign). Assume

5. Consider an HO type trade model with two goods (computers and shoe), two factors (capital and labor), and two countries (home and foreign). Assume that there is an increase in the supply of capital due to relaxation in capital control, use the Box Diagram below to answer the following | questions. The diagram below shows an equilibrium condition at point A for the two sectors in a home country. Labor allocated to computers Or Capital Total allocated to amount of computers capital in the economy, K Capital allocated to shoes Labor allocated to shoes Total amount of labor in the economy, _ a. Show the effect of an increase or inflow of capital on the diagram. b. Is there a change in the number of labor and capital employed in each sector after capital inflow? Explain why

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