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1. Show and describe the short run effects of immigration. Is immigration good in the short run? Repeat the story using the Mariel Boat Lift as an example.

2. Assume we have a Hecksher-Ohlin model from class. There are two countries (Vietnam and Japan) producing two goods (Microprocessors (M), Shoelaces (S)). Assume M is relatively capital intensive in production and Japan is relatively capital abundant. Answer all of the following questions for each country.

a. State the H-O Theorem. What will be the pattern of trade between the Vietnam and Japan?

b. Are your PPF's straight, bowed, skewed? Why?

c. Which country has a higher relative price for Shoelaces? Why?

d. Show what happens to the demand for labor relative to capital (RD) after trade. Label all curves and outcomes on the graph.

e. What happens to real returns after trade? Is trade good?

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