(I) Specific Factors Consider the Specific Factors model studied in class (all the standard assumptions hold). There are 2 commodities (beef and cars), 2 specific factors (land and capital) and one mobile factor (labor). The production of beef (qB) uses land (T) and labor (LB), while the production of cars (qC) uses capital (K) and labor (LC). Assume the country of Japan is a small country relatively well endowed with capital. Answer the following questions. Justify fully. Use a diagram or an equation when you are able to do so. Free trade: Assume that Japan is trading freely with the rest of the world.

A. Draw a diagram for Japan where you show plausible production and consumption points under Free Trade and identify a plausible Autarky point (use the horizontal axis for beef). Effects of the movement from Free Trade to Autarky for Japan Assume Japan suddenly stops trading because of a pandemic.

B. Use the relevant diagram to show how the labor allocation changes when the country moves from Free Trade to Autarky. Please measure the amount of labor used in cars from left to right along the horizontal axis.

C. Welfare Changes for landowners. Are they better off, worse off or neither when the country moves from Free Trade to Autarky? Use precise explanations.

D. Welfare Changes for capital owners. Are they better off, worse off or neither when the country moves from Free Trade to Autarky? Use precise explanations.