1. Consider the following specific factors model of an international economy consisting of two countries, A and B and two goods a and u and three factors: capital and skilled (L.) and unskilled (L„) labor . Initially, assume that capital is mobile across industries but not across countries. On the other hand, skilled and unskilled labors are specific to sectors a and u respectively. ![159_1.png](https://secure.tutorsglobe.com/CMSImages/159_1.png)
![426_12.png](https://secure.tutorsglobe.com/CMSImages/426_12.png)