o.com Please find a detailed response below Explanation: a. Good 1 Production Curve b. Good 2 Production curve c. The PPF The PPF is curved because of the concept of increasing opportunity cost of the 2 goods. This is to mean that as the production of onw good increases, more of the other good has to be foregone i.e you have to increasingly give up more of the other good in order to produce one good. Good 1 Production Curve 350 300 250 200 150 100 50 0 D 20 '10 60 80 100 Units of Labour Produztion 120 Good 2 Production Curve 350 300 250 100 50 0 0 20 40 60 80 100 Units of Labour >.- \ o Go Production 120 PPF 350 300 250 100 SCI 0 0 50 100 150 200 250 300 350 Good 1 N o 0 Good 2 H m c: The marginal product of labor curves corresponding to the production functions i1 problem 1 are as follows: Workers employed MPL in Sector 1 MPL in Sector 2 10 4.74 4.64 20 3.35 2.92 30 2.74 2.23 40 2.37 1.84 50 2.12 1.59 60 1.94 1.41 70 1.79 1.27 80 1.68 1.16 90 1.58 1.07 100 1.50 1.00 a. (5 points) Suppose the price of good 2 relative to that of good 1 is 3. Determine graphically the wage rate and the allocation of labor between the two sectors. For your answer, normalize the price of good 1 to be 1, then use the relative price to back out the price of good 2. (5 points) Using the graph drawn for problem 1, determine the output of each sector. Then confirm graphically that the slope of the production possibility frontier at that point equals the relative price. (5 points) Suppose the relative price of good 2 falls to 1.5. Discuss the effects of this Drice change on the income of the specific factors in sectors 1 and 2