Question: Question 1 (5 Points): This question is based on the Specific Factor (Short Run) Model Portland can produce two goods: manufacturing (M) and Agriculture (A).

Question 1 (5 Points): This question is based on the Specific Factor (Short Run) Model Portland can produce two goods: manufacturing (M) and Agriculture (A). The production functions of the manufacturing and Agriculture industries are given by QM = KO.5 LMO.5 and QA = T.5LA0.5 where: K is capital, T is land, and L is labor. Capital is specific to manufacturing and land is specific to agriculture whereas labor is used in both the industries: Labor supply is LM + LA = 1000 and T = K = 1000. Prices of manufacturers (PM) and of agriculture (PA) are both equal to 1: PM = PA = 1

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