1) Country X produces two goods, guns and roses, using labor and land. Assume that production of guns is relatively labor-intensive, and production of roses is relatively land-intensive. Suppose a large number of workers from a neighboring country migrate to Country X. Carefully explain all the predictions of the Rybczynski theorem about the changes in output of both guns and roses in Country X. Be certain to explain any shifts in resources from one industry to the other. 

2) Suppose Country X produces only two goods, food and clothing. At the initial free-trade equilibrium, the country produced 40 units of food and 20 units of clothing, and it exports 10 units of food and imports 10 units of clothing. Now suppose technological innovation in Country X leads to a balanced growth while leaving the relative prices of food and clothing unchanged in the international market. Production of food in Country X rises to 50 units. If consumption of food rises to 42 units, how many units of clothing will country X consume? Explain and show all

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