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Question 6. (24 marks) Consider a twocountry economy, US and Australia. They both use the following production technologies: producing one yard of cloth uses 2 units of labor and 1 acre of land, while producing one pound of food uses 2 units of labor and 4 acres of land. The US has 600 units of labor and 600 acres of land. Australia has 400 units of labor and 500 acres of land. In the US, the price of cloth is $120/yard in autarky. In Australia, the price of cloth is $150/yard in autarky. The nominal price of food is always $240/pound for both countries under autarky and free trade. The price of cloth under free trade is $135/yard. a. Each country uses the above production technology and all its factor endowments to produce food and cloth. Find out the factor allocation and output quantity for food and cloth in each country. (8 marks) b. Find the wage and rental of land in each country in autarky. (Hint: Goods price always equals its production cost (factor payment).) (8 marks) c. Find the comparative advantages for the two countries between the two goods. Is it in line with the HeckscherOhlin theory? (4 marks) (1. Determine the wage of labor and rental of land under free trade. Who would oppose free trade in Australia? (4 marks)