Assume that the free trade relative prices are still 1. Draw a possible consumption point for both countries. Justify clearly using a diagram, an equation or a detailed explanation. If the owners of one factor of production receive lower rents under free trade than in autarky, then the country's welfare in autarky will be higher than under free trade. Agriculture has land as a specific factor and the industrial sector uses capital as a specific factor.
Labor is mobile across sectors.
Suppose that both countries have the same labor force but that Happy has a larger supply of capital than Funny, while Funny has a larger supply of land than Happy. Justify using a diagram.