Consider the Specific Factors model studied in class (all the standard assumptions hold). There are many countries, two commodities (Cars and Soy), two specific factors (Machines and Tractors) and one mobile factor (Labor). The production of Cars (C) uses labor (LC) and Machines (M), while the production of Soy uses Tractors (T) and Labor (LS). Consider the "small" country of Islandia that is relatively Machine abundant (M/T > (M/T) rest of the world ) Answer the following questions. Justify fully. Use a diagram or an equation when you are able to do so.

2.Use a diagram to show how the Labor allocation among sectors changes when the country moves from autarky to free trade.