In the Specific Factor Model we have always assumed that production had constant returns to scale in the specific and mobile factor jointly, for example doubly Capital (K) and workers in Cloth-making (LC) will double Cloth output (QC). This meant that if we keep the capital input constant, the marginal product of labor is decreasing the labor input in this sector.

You are to construct a diagram under slightly altered assumptions: for the Food sector, keep its production structure as before. For the Cloth sector, assume that the marginal product of labor is constant, independent of the level of employment in that sector (LC).

In this alternative environment, study the consequences of an increase in the price of Food on world markets for i) the wage, ii) the levels of employment in Cloth and Food sectors, iii) the welfare of workers, and iv) the welfare of land owners. (You are not asked to address the welfare of capital owners on purpose.)