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Problem 2: ' Consider the Specic Factors Model for a small open economy that produces only agricultural goods (A) and manufacturing goods (M). Assume that the production of agricultural goods depends on the use of land and labor, while the production of manufacturing goods depends on capital and labor and that the economy initially exports agricultural goods. a) Assume that due to a natural disaster, "/1120 of the land employed in the agricultural sector is destroyed. At the same time, the prices of manufacturing goods fall by %20 while the prices of agricultural goods stay constant. Use the labor allocation diagram to analyze the effects of these changes on the allocation of labor between the two sectors as well as the effect on the nominal wage. Explain the reason behind any possible shift in your graph. (12 points} b) Use the PPF diagram to show the effects of ONLY destruction of %20 of the land employed in the agricultural sector on the level of output and export of agricultural goods in the international trade market. (8 points)