Assume the Home country is endowed with labor and capital, both of which are used in theproduction of textiles and cars. Production of textiles is labor-intensive while the production of cars...

Assume the Home country is endowed with labor and capital, both of which are used in theproduction of textiles and cars. Production of textiles is labor-intensive while the production of cars iscapital-intensive. Draw the appropriate diagram to show how the relative wage (w/r) and the labor tocapital ratio (L/K) is determined in this economy.Now, assume that Home opens to trade and the world relative price of textiles is lower than theautarky relative price of textiles. Show how this will affect the relative wage (w/r) and the L/K ratioin your diagram. How is it possible for the L/K ratio to change in the same direction in both industrieswhile the economy-wide L/K ratio remains constant?