Economics 433: Advanced International Trade Theory and PolicyHomework 1: Due in class September 10Please provide explanations for your answers and make sure that the answers are written inyour own words.Ricardo Model: The problems below require the use of the following information. There aretwo countries H and F that can produce two goods, coffee and donuts. The following datadescribes the endowment and technologies:MPLcoffee MPLdonuts LEH 2 1 100F 3 2 2001. Show the PPF-Budget Constraint-Indifference curve diagram for H and for F in anautarky (no-trade) equilibrium. Label the intercepts of the PPF and Budget Constraint foreach country and indicate the price of coffee in terms of donuts (provide numbers).Consider an international equilibrium with free trade between H and F. Suppose that in thisfree trade equilibrium that all the gains from trade go to H.2. Show the PPF-Budget Constraint-Indifference curve diagram for H and for F in this freetrade equilibrium. Make sure to label the intercepts of the PPF and Budget Constraintfor each country and indicate the price of coffee in terms of donuts (provide numbers).Also indicate the difference between the production and consumption levels in H & F(no need for numbers). Explain how your diagrams show only H gains from trade.3. Show the relative supply – relative demand diagram depicting the internationalequilibrium for the information above. Provide numbers where you can.The next two problems ask you to analyze how technology shocks change the equilibrium thatyou analyzed in questions 2 and 3.4. Suppose that the marginal product of labor in H for both goods doubles. Show how thisshock affects the welfare of consumers in F. Cover the range of possible outcomes (butno need for numbers). Use the relative supply – relative demand diagram in youranswer.5. Suppose that a natural disaster in F lowers the marginal product of F labor in coffee to 2from 3. How does this shock affect welfare in H relative to the initial free tradeequilibrium? Explain.