Assume that the United States and Cambodia both have similar demand functions and similar taste preferences. The United States however is capital abundant while Cambodia is labour abundant. Assume that the two countries produce only two goods: capital-intensive cars and labour-intensive shoes. Currently, the two countries are in the process of negotiating a bilateral free trade agreement (FTA).

a. ) If an FTA between the United States and Cambodia is created, according to the Heckscher-Ohlin model what will happen to the total welfare of each country? Specifically, use the concept of Production Possibility Frontier (PPF) to graphically show the changes in the welfare of both countries following the creation of their FTA.