2 Heckscher-Ohlin Model with Migration Two countries, US and Canada, produce two goods, Films (F) and Books (B), using two factors, Skilled artists (5') and Unskilled artists (U). Films are Unskilled-artist intensive and Books are Skilled-artist intensive. Factors of production are perfectly mobile within countries. Canada has half as many Skilled artists as the US and quarter as many Unskilled artists as the US. (a) Autarky equilibrium (1) Which country is Skilled-artist abundant and which is Unskilled-artist abundant? (ii) Show in a graph similar to Figure 4-2 from the textbook what an autarky equilibrium looks like in the US and in Canada. Put Books on the horizontal axis and Films on the vertical axis. Clearly label the axes, PPF, production point, consumption point, and relevant indi'erence curves. Explain why PPFs have a dierent shape in the two countries. (iii) In which country is the relative price of Books higher? (b) Trade equilibrium (1) Show in a graph you have drawn in part (a) (ii) what the trade equilibrium looks like in each country. (ii) Which country exports Films and which country exports Books? (iii) Which country is spending a higher share of its income on Books