1.Suppose a country makes two products: steel and apples.For the short run, labor is mobile between sectors, but capital is "specific" (i.e., only used) to make steel and land is specific to growing apples.If Home has a comparative advantage in making steel, draw on the diagram and state in words how trade liberalization would affect: (a) the nominal wage, and (b) the distribution of labor between the steel and apple sectors.

2.The USA is a significant net exporter of agricultural products.If other countries significantly cut trade restrictions on agricultural products, what would be the impact on the price of agricultural land in the USA?Use the specific factors model to explain this outcome.

3. Using the specific factors model with three factors (i.e., capital, labor and land) and two types of products (i.e., agricultural goods and manufactures), explain why in a country with comparative advantage in manufactures you would expect the owners of land to lobby against trade liberalization.