1. Using a Production Possibilities Frontier diagram for two-good two-factor economy, illustrate AND explain the relationship between opportunity costs and the relative prices (PA/PB) in a competitive equilibrium. Demonstrate how a relative decrease in the price of good A will affect this relationship.

2. Suppose that an American NGO comprising of several labor unions is planning to run an "international" campaign against free trade. would you expect workers across the globe to all support this initiative? Why or why not? Explain your answer using appropriate theorems.

3. Suppose the land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors. If there is an influx of immigrant workers into the country, holding the prices of agriculture and manufacturing goods constant, what happens to the wage rate? What happens to the rental rate of capital? What happens to the rental rate of land? Explain your answer using the graph for the equilibrium in the specific-factor model. [Hint: First draw this graph for before immigration and then show how it changes after immigration.]