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2. Suppose that goods are produced using two factors of production: land (T) and capital (K). The production of Agricultural products (A) uses a higher % ratio than the production of Calculators (0). Prices of output goods are PA and PO, prices of inputs are U for the rental rate for land and 7\" for the rental rate of capital. (3) Show the relation between relative goods prices, relative factor prices and relative factor demands (two-quadrant diagram). (b) The resource endowments of the countries, Home and Foreign, are described in the following table: Land (hectares) Capital ($ million) Home 4000 1500 Foreign 3000 1000 What prediction would be made regarding the pattern of trade that will arise (What good does Home export? etc.) (C) Suppose that there is a difference in the productivity of land in the Home and Foreign countries. In order to make the land measures directly comparable the land in foreign is multiplied by a scaling factor, A, that weights the amount of land in Foreign by the productivy of land in Foreign relative to Home, i.e. 1 hectare of land in Foreign is equivalent to A hectare(s) of land at Home. For what values of A will there be no reversal in the patters of trade described in (b) (Home and Foreign still export the same goods at in ((3))? Are there values of A for which a reversal of the trade patterns is possible