Question 1 Suppose there are but two countries, namely A and B. Each country is indexed by ";" for j = A and B. Both countries have no government, i.e. G, = 7, = 0. Suppose the technology of both countries are linear production in labor hours. That is, y, = z, N, where N, is the number of working hours in country j and Z, is the level of technology in country j. Suppose that ZA = 2 > Zg = 1 and preferences of consumers in both countries are identical a) Assuming a fixed time endowment in both countries to be equal to 1 unit, construct the PPF of each country. Putting both PPFs in the same figure and locate all important points. Comments on the differences and similarities between the two PPFs. b) Determine the competitive equilibrium in both countries. Are there any wage differentials in the equilibrium? Which one of the countries is supposed to experience a higher wage? Why? How about the allocation in both countries? c) Redo the problem "a" and "b" above, but instead assume that the labor endowment in both countries are different, i.e. hA = 1 and hg = 4. Comment on the possible sources that generate the wage differentials, if any