Could you please solve the parts b anc c of this question which I have attached so that I can compare with my answers? b. Let's define a variable z capturing the households' relative human capital en-dowment with respect to the economy's average, such that=hiShow that relative human capital of household i, evolves according toSe=· (²²²_-(1-_-85)² ) " . (25) ²z 8e)ē(3)(4)c. Suppose the +1-locus (4) intercepts from above at x = 1 with the 45-degreeline. What does this information imply for the evolution of inequality? Explainthe impact of the education subsidy on the 2+1-locus with an appropriatediagram.Remark: No derivations are required here. Just provide a decent rationaleand do as asked!

The question provides an equation (4) for the evolution of the relative human capital of household…

dowment with respect to the economy's average, such that -# h Show that relative human capital of household i, evolves according to *4+1 = (²7²-(1-80)²) " . (24) ² (3) (4) c. Suppose the 2+1-locus (4) intercepts from above at 2. = 1 with the 45-degree line. What does this information imply for the evolution of inequality? Explain the impact of the education subsidy on the 2+1-locus with an appropriate diagram. Remark: No derivations are required here. Just provide a decent rationale and do as asked!