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Question For the purpose of this question, the world consists of two countries, England and Italy, two goods, Gin and Vermouth, and two factors of production, Labor and Capital. All consumers in both countries consume the goods in bundles of fixed proportions (Leontief indifference curves), consisting of four units of Gin and one unit of Vermouth; each such bundle is called a Martini. The factor requirements per unit of output of the two goods are also fixed, and are the same across countries. They are shown in the following table: Gin, Vermouth Labor 1/3 , 2/3 Capital 2/3 , 1/3 The factors are immobile across countries, but mobile across sectors within each country. The factor endowments in the two countries are fixed, and are shown in the following table: England, italy Labor 360 , 240 Capital 600, 300 1. a Find the wage and the rate of return to capital in the two countries in the autarkic equilibrium (i.e. no trade). Which endowment is not fully employed? 2. b Suppose the relative price of Gin in terms of Vermouth is 1. Find the wage and the rate of return to capital in the two countries in the trading equilibrium